Major turnkey library systems vendors are not paying their bills promptly according to information compiled by Dun and Bradstreet, the international credit rating firm.
Of the four largest library turnkey vendors-CL Systems Inc., DataPhase, Geac and Cincinnati Electronics-substantial data was available only for the first two. Both companies appear to be slow in paying their bills when measured on the Dun and Bradstreet Paydex scale. On this scale a rating of 80 or above is considered prompt payment. The average rating for turnkey vendors in all industries is 68, with the lowest quartile of the industry having a Paydex of 59. In 1980-81, CLSI had sales of $11.7 million and a net income of $772,000. In 1981-82 its net income appears to have dropped to $150,000. The company has a net worth of $1.37 million, none of it in real estate because all of its facilities are rented. In January 1982 CLSI had a Paydex rating of 32, an all-time low which reflects a steady decline from its February 1981 rating of 43.
DataPhase's sales in 1981-82 were $7.2 million. No information was available on the company's net income. Its Paydex rating is 36 which is also an all-time low and represents a precipitous drop from the 51-52 maintained between August and November 1981. The company has actually taken more than 90 days to pay on a much larger number of its invoices than has CLSI.
Little information was available on Geac, but word-of-mouth reportage is that they pay promptly. Cincinnati Electronics has had a slow payment record, but the company's recent acquisition by Marconi Electric is expected to alter that pattern.
The situation among these vendors highlights the importance of the payment schedule negotiated by libraries installing turnkey automated systems, and explains why some vendors have recently insisted on larger preinstallation payments. The hardware component of a turnkey library system usually represents from 40-50% of the total cost of the system to the vendor. Thus, libraries purchasing turnkey systems should aim to have made payments totaling that percentage of the system cost at the time of delivery of the hardware. The proportion of the payment made when both hardware and software have been installed is negotiable, but it is normally regarded as wise to retain a balance of 20-30% of the total cost until the system is completed. This should be sufficient to give the library enough leverage to get results, yet assure the vendor adequate cash flow to meet its costs.
