Jargon of the Day: Vendor’s Guilt

It’s been almost three years since I quit the folds of a job with a private limited company, with a regular monthly salary, and almost a year since Prasad and I started off our own firm.

It was the beginning of a new continuum of professionalism, applying whatever we know & understand, making mistakes, learning from them, and trying to turn those experiences into repeatable behaviour.

And amongst all this, we observe each other, learn from each other, and try to correct each other from time to time.

One trait I’ve observed in our behaviour at times is what I’ve started calling Vendor’s Guilt (and Prasad does refer to it in a post a couple of months back).
Here’s what it is.

One of the reasons we wanted us to start on our own was to become a rare type of IT vendor: the kind who gives full value of the client’s money, does not act hostile towards the client or their work, and always has the client’s best interests in mind.

While all this is fine and a noble, the fact of the big bad world out there is that any business would try to hold back in negotiations and payments, and try to extract the most bang for their buck. I’m not sitting in judgment on anyone here — it is because businesses are closest to what we learnt as the rational person during our microeconomics classes — they aim to maximize gain while minimizing expenditure. Of course as people many of us might think it’s a crummy thing to do, but as people managing a business we get rid of the guilt associated with such behaviour, and thus we get the every day client.

Often times a well-meaning vendor (the one who goes by the principles I listed two paragraphs ago) gets carried away with the well-meaningness, and goes into altruistic territory. The classic symptoms of this behaviour are:

  • Relenting during negotiation (they can’t pay more than this, how will they get it done at the prices we quoted?)
  • Starting work without receiving any payments (of course they intend to pay, they can’t NOT pay, right? They are good guys!)
  • Volunteering to give advice not asked for at times which would reduce the size of our engagements (as a partner, shouldn’t I be concerned about saving my clients’ costs?)
  • Getting anxious whenever the client would raise even a small concern (how could we let this happen? how would this affect our relationship, and reputation?)
  • Not chasing clients for pending payments often enough (how would it look? he’s the brand manager, the payments are processed by the accounts guy, they have run out of their monthly budgets already)
  • Continuing work and taking on more pressure despite payments being delayed inordinately (they can’t pay, they don’t have money, and unless we deliver this, how will they earn and pay us?)

Please don’t get me wrong, it’s good to have good intentions for clients and prospects as a service provider. And it’s a bit scary for us to imagine turning into the other vendors we all have burnt our fingers with.

But when these concerns overshadow our own survival, and especially when we are dealing with clients who are bigger in size and turnover than we are, yet somehow they don’t have enough to pay us for our services, out comes this term: Vendor’s Guilt.

How was this affecting us? At times we were feeling the pressure from both ends: work was piling up, but money wasn’t trickling in, often due to the same clients. We would keep debating hours about why we are letting this happen to us. And in those hours of debate, it became clear that we were letting this all happen, and maybe were driving ourselves towards this, because we were striving to set ourselves apart from the run-of-the-mill vendor we hear stories of who shut down servers, or put up a nasty message on the homepage, or overcharges for superfluous services.

How did we manage our way out of it? It was a three-point realisation:

  1. That we really aren’t ‘that’ vendor. When we stepped back and assessed our work and engagements, we realised we were a high-performing considerate vendor, and most of our engagements are really healthy. Most of our clients respect us and our work, pay up on time, and barely haggle. And we have always strived to deliver the full value of what we’re paid. Plus, we have not abandoned on bad terms a single project because of payment or personality issues (touchwood), a problem that I increasingly see is quite common at least in the Indian market.
  2. ‘That’ kind of vendors still exist, and we still keep hearing about them. But there’s another realisation we’ve had: that the vendors aren’t always at fault. There are clients who give vendors a hard time, hold back payments, and misbehave with vendors. And there’s just so much that a business owner can take from a client before protecting their own business interests. I’m not condoning that behaviour, but if we haven’t stepped into their shoes, how can we judge them so harshly?
  3. We are a business, being managed and powered by people, who have bills to pay and dreams to fulfill. And at the end of the day, if we can’t pay the wages all these people are here for, and are struggling with working capital and profitability after working so hard, is it really worth it?

From the point that we’ve had this discussion, we’ve decided to keep a tight check on all engagements, raise flags whenever we realise it’s veering towards exploitation, and take appropriate measures. These measures are nothing more than getting clarity amongst ourselves, meeting with the appropriate people at the client’s end and apprising them of our situation. In all the cases, the other party does appreciate our concerns and our sharing with them.

Meanwhile, we continue to deliver value for all our clients, strive hard to get the best done for the best costs, because that’s what we set out to do and not out of any guilt, but we don’t make ourselves bleed to fill anyone else’s cups.

It’s not that difficult, really.

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