A reservoir of reason, rationality and resources - that’s how your colleagues would describe you as the Chief Finance Officer.
Partly because, a principal part of your job is procurement related – this obviously involves improving spend visibility, purchasing and contracting activities, cost savings, deal negotiations, and every other descriptor that says you’re being financially expedient with company finances.
No real surprise here, a CFO’s capital concern is accounting for savings to the bottom line of his company ledger.
With that said, it’s one thing to be the bargain hunter looking for reasonable markdowns, but what about those “steals” (the substantially more than the normal discounts) which initially, looks good on paper or sounds good in person, but after some thoughtful deliberation, prompts an involuntary narrowing of the eyes?
Think back to that deal. Do you remember how it made you feel?
Beyond the fine print and hearty conversation surrounding the transaction, have you ever questioned what exactly that deep discount really means? Are there any subliminal undercurrents? What plausible snag is there to scoring that supposedly steep saving?
If you haven’t, here are some my deliberations to ruminate over to cause you to pause when next something like this happens:
1. The feeling of duplicity
One of the very first thoughts that consumes me after such a deal is finalized is - “what am I missing here?”
For some reason, there is an overwhelming feeling that something of grave importance has eluded me, and by extension, the supplier or contractor I’m dealing with has an ulterior motive - this could be real or imagined.
This is understandably grave when dealing with a business partners for the first time, but even with well-acquainted associates, there’s still a soft but palpable notion that there has to be some kind of catch lurking somewhere.
2. A query of quality
The longer the nature of deal remains a source of apprehension for me a new concern is then conceived – quality.
“What is the state of these bulk products?”
“How valuable is this service?”
“How long will these goods last?”
Inquiries about the worth of the purchased products and the significance of the services provided are immediately called into question.
3. An erosion of trust
Following the aforementioned map of mistrust, the buyer-seller relationship is then reexamined.
The business bond – once perceived as a robust partnership – slowly becomes anemic, no longer seems symbiotic, and starts to feel predatory.
The umbilical cord of trust is severed.
I’ll stop here and let your imagination come up with other possible scenarios – which shouldn’t be hard considering the fact that being a Chief Finance Officer requires a certain level of foresight (for every move made, you’re required to think three or four steps ahead).
A double edge sword wouldn’t you say?
As you can see, things can snowball out of control and lead to a deplorable downward spiral of events.
The nature of this post isn’t meant to be alarmist or hysterical in any way – not in the least. My goal is to merely make you even more diligent by asking the question - “why?” This inquiry should also not be from a place of crippling fear, but from an empowered position of healthy curiosity.
In so doing, you’re encouraged to comb through the contract with a finer toothcomb and not get complacent – especially - when dealing with suppliers you’ve been in a long-standing relationship with.
Every now and then, question what a supplier’s long-term game is, and don’t get caught up in the short-term benefits of such deep discounts.
Remember, just as you’re looking to justify your bottom line, someone else is tasked with the exact same goal, so always be alert!
Written by Pip Spibey-Dodd @ Locomote