One of the major conundrums that we face is the issue of customer support prior to contract award. In this regard, we tend to be somewhat contrarian in our approach. It is a common phenomenon in the Military/Aerospace marketplace that the potential user expects virtually unlimited technical support during the proposal phase. He can afford to be very liberal with the use of your engineering resources, since there is no cost implication for him (except in the most abstract effect of an overall increase in your cost of doing business). This is a natural result of an environment where contract awards are usually in the multimillion-dollar range, and the winner will generally find an opportunity for the Government customer to pick up the tab for increased bid and proposal costs. It is also fuelled by the expectation that once a contract is actually signed, there will be precious little by the way of unremunerated support and cooperation for the customer in areas that aren't specifically identified by the contract (i.e., ECP's are the standard method of profit enhancement).

Promises of unswerving devotion and "commitment" prior to contract award are the order of the day. (Why on earth any businessman would have a "commitment" to anything as abstract as a program defies logic.) However, rigid contract interpretation is the method of execution once under contract.

The main reason for all this hypocrisy is that the Government is not allowed to exhibit a corporate memory, and buy from those suppliers who have earned their trust and loyalty.

Our philosophy is almost the obverse of this.

In order to keep our overall product costs down, we must be extremely cautious about squandering large sums during a proposal phase (because there is a high probability that this particular company will not win the competition and, even if they do, they may not award you the subcontract).

We are, of course, always willing to spend time with a potential user to explain the features and benefits of our equipment; but we must be very circumspect with regard to jumping on an airplane to give a demonstration for an application that may be just an unfunded glint in the eye of a company engineer. This necessity for moderation also applies to our ability to invest too much effort in researching a customer's application and producing a detailed system solution.

However, once it becomes apparent that the engineer has selected us, and obtained a reasonable assurance of funding for the program, we are more than willing to make the investment necessary to ensure customer satisfaction with the end result. Our philosophy is that our survival depends upon repeat business and a growing constituency of ASTi advocates out there in the user community.

We would like to think that most of the customer community that we deal with does not use delinquent payment to vendors as a deliberate policy to increase their operating capital and improve their ROI. However, it is also probably accurate to observe that most of our customers do not perceive that an immediate and tangible benefit will accrue to the corporation if they diligently streamline the transaction process for payment of outstanding accounts.

Interestingly, we do not subscribe to this point of view, since we find that having trusting and mutually beneficial relationships with our suppliers (in which prompt payment is a significant feature!) is a strategic element of our success. So much so that it is even referenced in our business plan.

ASTi is a small enterprise that is not able to secure large lines of credit from the bank, nor are we able to get attractive rates of interest on those loans. Nonetheless, we are a financially secure business that does not need to harass creditors every month when payday comes around. We do not need to, nor can we afford the labor cost and emotional investment to do so. Because it simplifies the transaction for both parties, we will usually allow net 30 credit terms to most of our customers. And, except for extremely large contracts, we will forego progress payments in lieu of a minimal number of milestone payments. This means that by the time we invoice you, we have usually been carrying the expense of your equipment for a period of three months.

The grace period of thirty-days-after-invoice is a practical recognition of the fact that it takes a finite period of time in every organizaton to process a transaction. The terms of our proposals accrue a carrying charge after this initial thirty day grace period has expired. This carrying charge is due on the thirty-first day, not on the sixty-first day as many companies seem to interpret. This is a fair and equitable recognition of the fact that we have had to absorb these charges for a full calendar month, and that the delinquent customer has had the benefit of that float for a similar period.

We are very serious about these charges. Otherwise, some of our customers would be, in effect, subsidizing their less diligent (not to say less ethical) competitors. This is not a punitive measure. The punitive measure comes into play if we have to front-load your prices by the anticipated carrying charges experienced for your previous transactions. Or even worse, if we find that we can no longer extend terms of credit at all, and that all transactions must be cash-in-advance.

We are a small company, and it comes as some suprise to the procurement staff of some of the mega-corporations that they have been placed on a cash-in-advance basis. They patiently explain that their system does not work that way, and that we must reinstate their credit. That we may choose not to do so never occurs to them. It is an even greater suprise when they discover that they need our equipment, and that they are actually obliged to pay interest on the overdue accounts. We take our payment terms very seriously. If you can't pay promptly, let us know and we will work something out.