A Sourcing Innovation Prediction for 2013, Part IV

The answer is that the blame lies entirely with …

One party, but before SI reveals the answer, let’s shed some more light on the situation. It turns out another chance occurrence of a number of temporary simultaneous wormholes through the multi-verse just happened to align in the right formation to carry another conversation forward from the future, through the Heart of Gold when the Infinite Improbability Drive is on full and when Mr. Dent happens to be brewing a cup of tea (so the conversation, originally not in English, happens to be, miraculously, in English). This conversation appears to take place about a month before the last one from the contextual clues.

Presumed Setting: The CEO walks into the office of the CFO, who is slumped over his desk.

Supplier "B" CEO: Are you ok?

Supplier "B" CFO: We’re done.

Supplier "B" CEO: What do you mean?

Supplier "B" CFO: The bank won’t give us another loan.

Supplier "B" CEO: What do you mean? We have millions on the books in receivables! And orders are still flying in!

Supplier "B" CFO: Yes, on the books. But we haven’t gotten a single payment in six months.

Supplier "B" CEO: So? This is normal these days.

Supplier "B" CFO: But we owe them millions.

Supplier "B" CEO: But we have millions in receivables, and we did get money six months ago.

Supplier "B" CFO: But we haven’t been able to even keep up on our interest payments in three months.

Supplier "B" CEO: Then go to the other bank.

Supplier "B" CFO: No other bank will talk to us.

Supplier "B" CEO: There’s always private equity.

Supplier "B" CFO: They won’t touch us.

Supplier "B" CEO: What about?

Supplier "B" CFO: The Triad? They don’t think we can pay either, they know we can’t cover it personally even if they break all our kneecaps, and our equipment isn’t worth enough on the black market.

Supplier "B" CEO: How do you know?

Supplier "B" CFO: I dropped by the back room of the local mahjong parlour looking to make contact and the Liaison Office sat down at my table shortly after I arrived. Seems they already knew of our plight and knew why I was probably there.

Supplier "B" CEO: What do we do?

Supplier "B" CFO: Well, we can’t make payroll next week. We have no choice but to shut down immediately.

Supplier "B" CEO: But then we’ll go into receivership! The bank will sell us before we have time to figure something out!

Supplier "B" CFO: Probably.

Supplier "B" CEO: But we have money coming!

Supplier "B" CFO: And I’ve contacted our five biggest clients repeatedly. They keep saying soon, and then hang up.

… at this point, a wormhole closes … but a few hours later, we hear this, a conversation which probably takes place in the very near future but before the last two conversations:

Accounts Payable Clerk: The phones are ringing off the hook. Our suppliers want money. When can I pay them?

CFO: Depends on who is asking, how late we are, and what the consequences are. If we pay them all now, we’ll tank our first quarter. Let’s review the list, in order of amount outstanding, until we cover 80% of the outstanding dollar amount. The last 20% you can pay two weeks after they ask again. With a check. In the mail. Go.

Accounts Payable Clerk: We haven’t paid Supplier “A” in nine months, they account for 12% of our outstanding payables, and they are livid.

CFO: Catch up 3 months today, and promise to catch up 3 more months next quarter. They’re still on contract for another year for what is currently our second best selling product line, and they aren’t going to do too much to risk that business.

Accounts Payable Clerk: Next is Supplier “S”. They’re 10% and they are threatening to sue, even though we’re only seven months behind.

CFO: Well, we didn’t renew their contract and since we haven’t ordered a thing from them in six months, they probably think we don’t intend to pay and that they don’t have anything to lose. I was discussing them with Legal the other day and they have a history of being litigious. I think we have to pay them as we can’t afford the distraction of a legal battle, or the unnecessary cost. Give them half today and promise the rest next quarter.

Accounts Payable Clerk: Next is Supplier “B”. They’re 8% and we’re 10 months behind on some invoices.

CFO: Don’t worry about them.

Accounts Payable Clerk: But like Supplier “S”, we’re not using them anymore.

CFO: Not true. While we did discontinue our worst selling product line, which they were providing, they did win the contract for our new product line, which we expect to be the top seller next year. It’s worth millions to them. They won’t jeopardize that. Plus, they’re growing. They can wait another quarter. They’ll be fine.

… at this point, the conversation trails off, but now we have the whole story and the blame rests solely with:

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