Dear Public Company CFO
On the surface, it was not unique. An email requesting extended invoicing terms for an Aha! subscription. Not atypical considering world events, but it was the tone that made the team look twice. A very successful, publicly traded company was insisting on amending their plan to pay their bill at a future time — many months from now. Their reasoning? The CFO wanted to improve the optics of cash on the books.
Some would argue this makes sense — why pay now what you can pay later?
We have received similar requests from well-known companies that we have served well for a long time. The details differ but the essence is the same. “These are unprecedented times, we are unilaterally now paying vendors 120 days or even further in the future.” And the message is clear — this is just business, it is not personal. Deal with it.
But business is personal. Our software is thoughtfully built by experts and we serve customers with great care. What we provide has real value and it costs us to produce that value. Besides, we have a responsibility to our teammates and our other customers. They rely on us to run Aha! as a profitable and sustainable business.
After a series of back-and-forth emails between the teams, I wanted to help resolve the situation and offer my perspective.
I wrote back that we are all being impacted in unforeseen ways. I have a high school senior. What will his first year of college look like? Who knows at this point. Will any of us be able to see our parents or family members in person that do not live close to us this year? Who knows at this point. How many people will be unemployed and what will the economic recovery look like? Who knows at this point. The future depends on what we do now — how we treat ourselves and one another.
Aha! is a private company of about 100 people. We have never raised any money and have worked hard to build this meaningful business over the last seven years. But like any for-profit company, we need to be paid by our customers in a timely way. We need to pay our teammates, who have families and financial responsibilities. We need to pay our own vendors that we rely on in a timely way, who ultimately need money to pay their employees.
I understand that successful public companies are seeing their customers struggle too. Many of these public companies are not profitable yet. Investors have little sympathy. And yet the business has to report on its earnings quarterly, so there is real concern that spending money leaves a less than ideal picture of cash flow when receivables are delayed.
Here is the problem: Big companies are kicking off a cascade of negative events that flow downstream — this is trickledown economic destruction.
We are incredibly fortunate. Aha! is doing well and our foundation is strong. In a way, we were built for these unprecedented times. We are self-funded, self-reliant, entirely remote, profitable, and have a streamlined cost structure. Our customer base is large and diverse. Adoption of our software continues to grow due to the fact that strategy and roadmaps are not optional for businesses. Ideas that are captured and prioritized today are the future of any organization.
But most companies are not doing well. Too many people are suffering — layoffs and some going out of business entirely. That is why I felt obligated to raise my voice and to hopefully raise the CFO’s consciousness, as I knew my email would be internally escalated. I understand that every CFO has a hard job to do and is facing once-in-a-career challenges. It is also true that publicly traded companies have different fiscal responsibilities and that shareholders are people too.
At the same time, many significant companies showcase their human-centered culture and philanthropic programs. This specific company has a well-defined social impact program. Why not apply that same mindset and support the smaller vendors you depend on during this crisis? It seems like building supportive communities should start with how you treat your team as well as the broader teams of companies that provide your own with needed technology and services.
Everyone needs to do their part — now is the time to act with integrity and care.
Growing a business does not need to be an at-any-cost event. People and profit are not mutually exclusive. As I wrote earlier, we are fortunate. A six-month delayed payment would not impact our company, but we can (and should) consider the impact of our actions and what it says about us. It is conceivable that companies can engage without hurting each other.
Much has recently been written about whether shareholders should always come first. There is no right answer. But if you want to put people first and have a major impact on the lives of others and the greater economy, acting conscientiously is the only way towards a positive outcome.
At a minimum, larger companies need to understand the ripple effect of delaying or not paying their bills.
It is true that smaller companies are at greater risk during this time. But should employees at smaller companies be prioritized over shareholders at larger companies? It is hard to make a value judgement on which individual is more deserving. These are deep ethical and moral questions.
We were able to work out an equitable solution with the CFO in our situation. I hope the conversation helps change how they interact with the next vendor. And I hope you think differently about how we can all work together now and in the future.
Who do you think should come first — shareholders or suppliers and their employees?
About Brian and Aha!
Brian de Haaff seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 roadmap software and one of the fastest-growing companies in the U.S. He is also the author of the bestseller Lovability. Brian writes and speaks about product and company growth and the adventure of living a meaningful life.
Aha! is the world's #1 roadmap software. We help more than 5,000 companies and 300,000 users create strategic plans. The company was founded in 2013 by Silicon Valley veterans and product management experts Brian de Haaff and Dr. Chris Waters. Aha! is one of the fastest-growing software companies in the U.S. The company is self-funded and profitable, with an entirely remote team. Learn more at www.aha.io.
Novice Long haul truck driver at 65
4yWow. Ripple effect indeed. My opinion, extending the terms does not make the bill go away. What it does do is make the balloon payment that much harder to pay in the future increasing the possibility of a default. Anticipating a better financial ability to pay in the near future could be a stalling tactic for a company that could be chapter 11 in mere months while the attempt to paint the books favorably at present to appease shareholders could be seen as dishonest at best. The big problem I see with the push to defer payments at present is that many were barely able to meet their obligations prior to the pandemic, how will they meet the obligations plus the missed obligations after the crisis has passed. They won't and well run business like Aha may get taken down with them. My advice, if possible reduce the fees but a deferral only kicks an unaffordable can further down the road and even any accrued interest will be unrecoverable in the even of litigation. No extension of terms. From my personal experience. In 1993 I extended time to pay to a large corporation who restructured, seemingly overnight. I ended up getting 60 cents on the dollar. Lost my house, future contracts and shuttered my business. They continued on, new name
Manager, Product Management
4yYou may have seen this value ladder before, 1. Obey the law 2. Take care of members/customers 3. Take care of employees 4. Respect vendors and suppliers "And when you do these things in this order, shareholders WILL be rewarded." -James Sinegal
Senior Quality Analyst / Quality Management - Regulatory Compliance, Data Quality & Governance, Product Ownership, Process Improvement, Strategy Innovations
4yI am curious: since you are poised in a way that you would be fine for another 6 months, and they were only asking for 120 days, why the great effort to have it reduced & receive payment sooner? You state it's so that they are more considerate towards other private startup firms, that might not be as robust as Aha! - but doesn't your demand for sooner payment mean another firm has to be pushed out further? Perhaps it will be one that hasn't been as fortunate as you, and will need to shutter its operation - whereas that CFOs plan would have kept you both open. How much do you stand to lose, as well, if they transfer to a different vendor, more willing to work with them? You cite payroll risks - did you not apply for the govt payroll coverage grants, or did you apply and get denied? The article starts off with a "sinking need" feel, then transitions to a "Robin hood" pivot. Except that it feels like a lot to write to justify why you pursued it, if the company was well situated without it.
Strategy and operations executive, focused on Improving, Growing, and Protecting the business.
4yBrian, I respect the points in your article and agree that employees would come before shareholders as long as shareholders understand from the onset that this hierarchy is inherent in the DNA of the organization they are investing in. However, I argue that generally, customers must come before the team members. I previously asked whether this company was looking to delay payment due to hubris or because they were facing serious cash flow issues. I think that is fundamental to understand in this particular example. I personally love the culture you are building at Aha! and hope that it can be sustained as the organization grows. I have been in SMEs with similar values and have found that the culture becomes quickly diluted as the company scales up. There are several points during the growth stage whereexecutive leadership really needs to re-examine and (re)define where priorities lie, given their increased customer base and level of competition in their market. I imagine your clients would appreciate the people first culture, but may potentially question it later if there is a conflict of interest.
Cyber Product Management & Business Development
4yBrian - Thanks for penning this. A lot of small and mid size players across the ecosystem are impacted by this payment delay so much so that it's become a danger to their sustainment. Shareholders do come first. Optics is important. But if you have money to invest in CSR activities, you sure have money to pay off( at least in part) your employees and vendors.