Perhaps I'll display my ignorance of "how things are done", but here goes...
The Ericsson deal (so far) is a multi-year, multi-million dollar deal. Think you'd take some time paying that bill?
If it is a multi-year deal, then it would only be proper to initially recognize "some" of the "headline deal size". Later, as the deal progresses, additional revenue would be recognized. Only when revenue is recognized is A/R created -- and then it ought be be paid swiftly on ordinary commercial terms (ideally 30 days, 42 is OK, 60 is worrisome, 90 days and a salesman might have a "reversal" made against his sales commission).
And secondly, given the long term nature of the relationship, think you'd push too hard to get it paid by a certain date?
Without knowing anything about the specifics, all I can say is that if I was running the company and my new "long term partner" was not willing to make milestone payments promptly, I'd really be asking myself if this is the sort of partner I wish to be bragging about doing business with....
You may very well be right, 100 DSO may be more an indication of the crummy business practices of the industry as a whole rather than alarm bells indicating that VSNT is being overly aggressive in booking revenue. I'm still appalled at it ;-)
- Daniel |
