Friday, September 07, 2007

Are most companies unethical?

It is typical these days for many companies to delay payment of invoices to smaller suppliers as long as they they can. They do this thinking it is simply being clever. However, a few years ago many companies thought that backdating stock options was being clever. Others thought that null trades, where nothing really changed hands, but revenue was booked in both directions, was exceptionally clever. So how clever is it to avoid paying legitimate debts until you have gone past agreed terms?

One of the Principles of Mars, Inc., a company which is a passionate believer in ethics, is prompt payment of suppliers. In fact, it is also good business since other companies want to do business with such a company. Therefore, the manager who initiates a policy of slow payment is not only acting unethically, but is doing his or her company a disservice.

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