I’m tempted to say that if an organization sends out a memo stating that the next pay date will be moved back by five days “due to a delay in funds receivable,” the organization is almost certainly on its very last leg.
What do you think, though? Is that jumping too far to a conclusion?
I don’t know if I’d say ‘certainly’, but yeah, it could well indicate a serious problem with cashflow/operating capital.
It might not necessarily be an indication of fatal decline though - could be that a major debtor just paid later, and that the company made a choice between paying late, or losing interest on invested capital, or something.
Jumping too far. It’s not a good sign; however, we ran into a situation in which we had a year+ of cash in the bank but it was tied up in investments like money market accounts, we had a bunch of bills come unexpectedly due during one month and a company not pay us on time. We explained the situation and employees happily waited an extra week to cash their checks- so it wasn’t a problem or a sign of a bad situation, but we traded information for the delay. (We also asked that anyone who needed to be paid earlier to email the administrator privately and they would be paid immediately.)
I don’t think it’s too far a jump.
Plus the company may be committing a crime by not paying it’s employees on time.
They certainly need to pay their withholdings to the government on time, yes.
I’ve worked for small companies for a long time, and they were always on the verge of insolvency. Still, even though there have been some occasions where my paycheck was late, they always managed to pay me eventually.
So, it’s not a good sign, but it doesn’t me that bankruptcy is inevitable.
A few years ago I worked at a company that got almost all of its revenue from a half dozen or so large contracts. There was a formal procedure in place to determine what to do if there were signs that one of the company’s two or three main customers wasn’t going to pay you on time as expected. The answer was always “layoffs” or “no layoffs” - there wasn’t a choice to just keep everyone on and not pay them for a week - they had to get a pink slip and go out the door subject to recall when there was money again.
I think the issue is companies that cut it so close that if they don’t get paid on Thursday, they can’t pay their employees on Friday for the work that was already done M-W. And that’s a pretty bad sign. It certainly would be a reason to polish your resume and start making some phone calls, if you didn’t have some other reason to gamble on the company (like it’s a really small start up with a great product and generally smart people running it.)
At least they sent a memo first.
This. Don’t panic yet, but get your resume ready. If it happens a second time, though (or if there’s a second delay on this paycheck), go into full looking-for-a-new-job mode.
Borrowing against Accounts Receivable is pretty standard practice, if they don’t have the credit to do so that is a huge red flag. I would say their finances are so tight that anything at this point could push them over the edge. For you there won’t be another delayed paycheck, you’ll simply show up one day to see the doors locked.
Maybe they’re just having “technical problems” with their payroll software. :rolleyes: Any delay in payroll is a red flag; no healthy company should ever do this.
I’d take it as a sign to get my resume and LinkedIn updated. And to start sending out some feelers in my field.
While it may turn out to be just a ripple, there’s an old saying about fortune favoring the prepared.
And even if it is just a temporary thing, one of the feelers could pay off big.
In many states (if not all), it’s illegal for an employer to not pay it’s employees on the regular pay date specified by the company. I know this is true in California, for instance. Also, federal law states that businesses must establish a regular payday and non-exempt employees must be paid on the regular payday.
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If it happens a second time, I agree: Start looking for another job.
In 2011, I did contract work for a startup that was rather lax in paying employees. :mad: IDK if that’s still the case, but it wouldn’t surprise me to see stuff on Facebook from the people on my FF list who still work there that their doors have been shuttered too.
FWIW, I work for a VERY serious, very solid and well-established organization (the European Patent Office), and last year there was a delay in our salaries. But it was not the fault of the company – it was the fault of the bank through which the company paid us: The bank had installed new software and there were unexpected bugs that messed up with the money transfer systems. We got our salaries with a week delay.
Maybe something like this happened? (just being a bit of “devil’s advocate”; maybe the fault is not 100% in the company).
I worked for a pretty large, well-established company when I was young that did this once. The second time we didn’t get paid it was because they declared bankruptcy on a Thursday and we all found ourselves screwed on payday when we read about it in the business section.
Since I became a senior finance person in my last three jobs, I ALWAYS make sure nothing interrupts employee pay and taxes. Everything else comes after that. Besides this being only right and just, it means fewer people are likely to know if you are having a temporary cash-flow problem. It is just better for everyone, including the company.
It’d say that after a late paycheck, one would be looking at an 80% chance of layoffs in the next few months-- definitely worth updating the resume and putting out some feelers. If that’s happening along with any other bad signs, I’d waste no time putting together a plan B. It can be tough to tell if you are looking at a hiccup, a drawn-out decline, or a sudden failure, but it’s always a bad sign.