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I sold to Walmart for 4 years. In the beginning we believed we were lucky to become vendors. Then we realized how much stress they created. Every single year they would short pay our invoices. We would have to submit a claim with Walmart accounting. This process was completely and utterly time consuming. But the worst of it, they wouldn't pay the invoices owed until a year later. It's hard to float a $100,000 short pay as a small business.

They did much more and I was surprised that they existed this way in business

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This kind of abuse is apparently common enough that there's an EU directive that limits this abuse in the EU: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2...

In the UK, for example, even before the EU directive, unpaid commercial debts accrue interest and late payment penalties and can be claimed retrospectively for up to six years. This means that you can quite legally wait until you've stopped doing business with a particular customer before then claiming late payment penalties and interest.

These rights cannot be waived by contract.

This is the first concrete example I've read of the EU being drastically more pro-business than the USA. Very interesting.

And for someone who wants to point out the lack of that regulation in the USA is still "pro-business" I'd say it's pro-monopoly, and against the 'culture of business' that was traditionally a large part of the US.

It seems to me that the US's attitude of being pro-business is to have as little regulation as possible and allow many forms of anticompetitive behaviour, whereas the EU is actively involved in regulating the market to keep it free and accessible for everybody.

I've seen Game Publishers do this with milestone payments but for a different effect. One of the common clauses is that the publisher gets all assets(source code, art, etc) in the case of a studio folding.

They then intentionally delay milestone payments about 3/4 of the way though the project, watch the company fold(since that's the highest-burn part of the project) and then re-hire 2/3rds of the existing staff who are now out of a job to finish the title.

It doesn't produce the highest quality games but I'm sure it earns them a bit more money.

These types of practices make me sad for humanity.

I mean, the two parties have a diametrically opposed view of how the world works and what their own moral obligations are.

One party thinks they're trying to make good games, and getting paid in the process.

The other party views the rest of the world as a potential money machine, and they're just optimizing around which lever to pull to maximize their return.

Matt Levine had a fun article[1] about this happening in a different context. 'FERC built a terrible box, and the box had some buttons that were labeled “push here for money,” and JPMorgan pushed them and got money.'

One approach isn't necessarily 'wrong' and the other 'right', but bad things obviously happen if you thought you were working with a business partner, but instead you got a shark.

[1] http://dealbreaker.com/2013/07/electricity-market-rules-were...

> I mean, the two parties have a diametrically opposed view of how the world works and what their own moral obligations are.

> One approach isn't necessarily 'wrong' and the other 'right', ...

No. The truth is that one approach is, in fact, unambiguously morally inferior to the other. That morality may not match the financial implications of a contract, which should be able to assume "good faith" and "fair dealings" in their contracts.

I can understand that some people care more about the money than the morals, and will exploit contracts and the law in unexpected ways to try to make more money or gain more power. But I refuse to accept that this behavior is morally ambiguous. And furthermore, I refuse to act immorally.

Perhaps that means I will miss out on some money or power. Perhaps I will be competed out of business because of this conviction. And yeah, I'll reluctantly play the stupid game where I must by offering discounts for on-time payment instead of attempting to write in appropriate penalties and interest for late payments that I can't enforce against an army of corporate lawyers.

But I can say with conviction that acting in bad faith is morally wrong.

I've recently had such an experience though not in gaming.

Recently? I could see that happening a decade ago but I think it would be harder to do now, especially at the (A)AA level. Still, the video game industry remains volatile and a lot of independent developers are one missed milestone payment away from layoffs if not shutdown.

Yup, last story I heard was ~3 years ago. With the game industry there's always a new set of fresh blood that has idealistic views and hasn't seen what publishers(or exploitative dev studios) can pull.

I've never worked with Walmart directly, but to be fair, I experienced this kind of thing all the time as a contractor. It seems to be sort of an unspoken thing in accounting departments that you allow vendors to complain before you pay too much attention to the particularities of any given invoice.

It doesn't excuse the practice and I always appreciated the clients who paid correctly and promptly, but I don't think it's limited to a specific company, and small businesses in general should be prepared for this type of short or delayed payment, from both financial and legal perspectives (credible legal backing can go a long way to establishing yourself as a vendor whose invoices are to be respected).

The problem with behemoths like Walmart is that they know you're not going to be able to stand up for yourself in a meaningful way. The relationship means a lot more to the non-behemoth, for whom it may well be life and death, whereas the behemoth can probably get a replacement vendor set up within a couple of weeks.

Lots of huge companies exploit such advantages aggressively; in many cases, it crosses the line between aggressive business and cost savings to outright bullying.

I work in the IT division of a Fortune 100 pharma. About four years ago I was astonished as a senior business director proudly bragged to us about the company's successful accounts payable strategy of paying all vendor bills as late as possible. This allowed the company to earn a higher yield on overnight investments, despite the continuing outcry from business partners.

I imagine most giant corporations now behave this way, with only the little guys playing by the rules, and paying the price.

I see most firms start with NET30 now, but many have begun pushing NET90. We started putting terms in our contract that show bill due prior to work commencement, most don't pay attention and expect you'll just fall in line. Those are usually customers we don't want. The smart ones that actually pay attention will usually counter with a tiered approach. 50/50 or 40,30,30 with milestones. It can easily make or break a firm. Nothing more frustrating than a small business that has issues with finances not because of money, but because of erratic clients.

Doesn't work all the time, but my approach to this is to pad rates 10% beforehand, then offer a 10% discount on any invoice that follows one that was paid NET10. Whatever bean counter is pushing for NET45 or worse usually sees the benefit of going to NET10.

Discounting only the single invoice that follows one paid on time keeps them honest. Short or late pay me, and the next invoice gets no discount.

If ever there were a use case for a lawsuit punitive damages, some poor company that is driven out of business by a well-documented case of this would be it. I know I'm being naive here but I feel that it should be clear to anyone with a sense of propriety that the big company should have to pay the liquidation cost for the small one!

Yes, suing your biggest distributor is a great way to succeed in business.

That's exactly my point! That and the fact that lawmakers are too weak willed (or have too little leverage) to take a stand against stuff like this is why big businesses are able to get away with this blatantly unethical behavior. Anyway, my example was an already-failed business for a reason!

If you're liquidating the business, as the OP describes, I doubt that's your biggest concern.

Lawsuits are expensive and utterly pointless if you can't see them through to completion.

I don't see what one objection has to do with the other.

I remember in an accounting class long ago discussing Walmart's relationships with their vendors. They would defer payment to vendors as long as possible while earning the cash from selling in their stores. So effectively they would have an interest-free loan on their balance sheet...

What you're describing obviously sounds different - but somewhat an extension of holding off payment for as long as possible, to the point were it becomes onerous to the vendors.

edit: for clarity, typos

From what I have read: Large businesses routinely do this to small businesses. It is standard operating procedure.

If you have a small business, you need to be very leery of having a large customer.

Walmart will have increasing competition in its role as buyer. Being a better buyer was and I guess still is one way Aldi is able break into saturated markets.

Don't think this is unique to Walmart. Being big players, it's always very hard to play hard ball them for small business.

Its amazing how many times Net 30 turns into Net 120 when dealing with a larger company. I noticed (in the 90s when I cared about such things) that companies that paid from banks at the end of the chain (like, oh say, a Montana bank) were more likely to pull that crud.

Just to be clear, there is nothing new here.

I did retail data analytics on behalf of large CPG companies with their Walmart, Target, Costco data for a few years. Walmart made it very, very clear for several years now that their sales/inventory data, and any apps the vendors build using it, couldn't be on AWS.

It made things very challenging for us, because Azure is too expensive and Google Cloud (especially at the time) lacked support that wasn't absolute shit.

Googler here. I apologize if you had a bad experience with Google support. We've had various tiers of support, all the way up to dedicated engineers. Can you please share your viewpoint here, or your experiences?

The article is about vendors selling Saas to Walmart. Having the ability to turn off the service makes it easier to get invoices paid.

In the 90s I had this problem with Sun Microsystems (it's called "aging payables"). If you give a discount for prompt payment they take the discount and pay when they want. If you charge a penalty they pay when they want and ignore the penalty.

I needed to make payroll so drove over to HQ to try to get payment. They wouldn't even let me in past the lobby. Finally I just asked everyone who walked in, "Oh, are you here to try to get them to pay their overdue bill as well?"

Eventually a confused looking guy came out and handed me a check.

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