On 1/14/2015 4:32 PM, Wayne.B wrote:

On Wed, 14 Jan 2015 15:07:41 -0500, "Mr. Luddite"
wrote:

Sorry for being long-winded but it's hard to explain in a concise manner.




===

Thanks, interesting perspective. One of my old sailing buddys went
bust on OPM and it wasn't pretty at all.



This type of company is only possible in certain types of businesses.
The product was high dollar value capital equipment
that might run $500K to well over a million and take 6 months to a year
to design and build. Progress payments were the norm, so I'd usually
get about 25% of the contract value with the order and then continued
payments based on achieving certain schedule milestones. The result is
that the customer basically finances his own project so there was little
need for outside financing.

Every so often the customer's financal officer would want to impose a
penalty clause in the contract in the event we didn't meet the scheduled
delivery. Some of the proposed penalties were severe and a three or four
week delay could represent big bucks. I learned to accept them, but
only with an additional clause that allowed for an equally sized bonus
for each week of early delivery. Usually solved the problem and the
idea of a penalty clause was scrapped.