Estimated reading time: 3 minutes, 45 seconds

Cecil's Disclosure

I used to hate when someone asked me the old "Which do you want first, the good news, or the bad news?" I always assumed they really wanted to give me the bad news, and the good news was just filler. So I'm not giving you the bad news, because you've already heard too much of it lately.

What I do have, is a few observations about where we are and were we're going. And speaking about going, I have to say that I'm finding it a bit less painful filling up my KC (Kennedy Continental) gas tank, with the price of gas dipping near the $1.50 mark. The other side of the coin is that paying the credit card bill every month is not getting easier, and may be likely to get tougher as we collectively tighten our belts.

This week, I'm filling my tank in Central Florida - Mount Dora, to be exact. An old town with lots of history, that's grown in popularity in recent years. It's mostly known for its antiques, but more specifically for its antique boats - mostly Cris-Crafts. Beautiful wood designs with long bows and powerful motors. Those big motors were needed to push the relatively heavy wooden hulls on top of the water. But when they were made, gas sold for 15 to 25 cents per gallon. Lighter and more efficient materials came along, but it still costs more to water ski on the lakes around here.

Speaking of relative value, three of my clients have recently begun reevaluating their EDI systems. They've been running the same applications for several years, but though that the time might be right to see if what they were doing was still best of breed. Since neither of the companies is under a lot of pressure to change any time soon, they began with their own, measured approaches to the process.

Each came to me independently, asking that I review their plans and findings. One thing I found interesting was that each company had its own check list for evaluating vendors. Actually, that wasn't the interesting part. The fact that item #3 on each list was an evaluation of the prospective vendor's financial viability. In the past, I've always recommended checking that your supplier's finances were in decent shape, but it was typically one of the tasks to handle after narrowing the field to the final 2 or 3 candidates. Not so any more.

Of my 3 clients, only one had been able to get what they considered to be useful answers from their vendors, and that one was only marginally satisfied with the results. It seems that most EDI providers fall into 2 categories in terms of fincial transparency.

1- Public congolomerate
 The large, traditional EDI companies that are publicly held, are owned by a larger company, and that company only reports its higher level financial results. So, while the parent company of a provider may report profitability, and show that its EDI division is doing well, detailed reporting doesn't dig into the depth of the company my client really wants to know about.

2- Small / privately held
Those companies that fall into this category don't necessarily have the corporate legal reporting mandates, and are free to make their own decisions about what they report... or don't report. For whatever reason, they generally choose not to report their financial conditions, either because the conditions are not good, or they just don't want to let everyone know how well they're doing.

It seems that all 3 of my clients ran into some versions of these conditions. What they reported to me was their amazement that even when they made (credible) financial disclosure a condition of doing business... up front, these companies refused.

I'm sure that keeping finances under wraps helps in some ways, but when it becomes a direct impediment to gaining new customers, it can only be counterproductive. What's worse than not getting a new customer? Loosing an existing customer? How about if the company asking for financial information is already a customer?

All this secrecy makes me wonder if any EDI provider is viable any longer. I know that when fiberglass came along as a viable alternative to mahogany, Chris-Craft made the switch pretty quickly. The boats didn't have the traditional beauty of the old wood, but they lasted longer and ran cheaper. Maybe that's why the company is still around after 130 years.

I'll be heading back to the cold North over the weekend, not that there's much more financial comfort there.

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