Is It Normal for Companies to Delay Salaries Due to Client Payment Issues? Seeking Advice!

Hi guys,

My name is Sunil, and I just joined a new organization. To my surprise, on the salary day, I received an email from our HR department stating that due to a delay in payments by the clients to our company, the salary will be processed one week later than the scheduled date.

This is completely new to me. I had worked for 8 years prior to this and never faced salary delays, at least not due to the above-cited reason.

Now, I want to ask you guys if this is a normal process, and I should not be worried about anything. In my opinion, any organization must have reserve funds to pay the salary of their employees in such circumstances. It raises an alarm bell for me that my company may not be able to pay me because its clients are delaying payments.

Please help.

Thanks in advance.

The bottom line is that the company does not have reserve funds to take care of such issues. You would need to review your options as this is a clear warning bell on how the company is being run. If you find a better option, go for it.

At the end of the day, the company should realize that you also have bills to pay. Try and find out the track record...does this happen often with your company... A delay in client payment is no reason...any professional company would have at least 3 months reserve to take care of all eventualities.

Hi Sunil,

Payment of salary is purely based on the availability of cash flow. Even though the salary is to be paid by the 7th (or 10th in some cases), many organizations, due to inadequate cash flow, delay the payment of salary. In my previous organization, they had a system of staggered payment, i.e., lower-level staff would receive the salary first on the 07th and the managers the last, but with no fixed time frame. I used to receive the salary between the 15th and the 20th every month as I was in the Managerial cadre. I never felt it was an issue. I adjusted my personal expenditure cycle so that I was able to manage even if the salary was delayed. Don't look at this as an issue. If the organization is good and if you feel happy to work in the organization, think twice before you quit. After all, the salary is not the only criterion to work in the organization. More than the salary, professionalism, culture, growth opportunities, job satisfaction, good team members, etc., are vital. If you are happy with all these aspects, then I suggest trying to adjust your personal monthly expenditure cycle so that you can manage even if the salary is paid late. As correctly said by one of my friends, employees are not paid for six months. Think of their plight. One of my friends was not paid for six months, and he never disclosed it to his wife, managing with his personal resources.

BHAVAN

Hi Bhavan,

This is not an adjustment but a compromise with the situation, and moreover, it could not last long. If someone is working in an organization and regularly attending his duties, then it is the organization's duty to pay his salary on time, regardless of whether the fund flow is there or not.

It is not a good sign that due to non-availability of funds, the salary could not be released. Think if banks act like this, that today no money has been deposited, hence we can't allow any withdrawal, or we are unable to operate ATMs.

Every organization has some emergency funds to cater to day-to-day operations.

Hi,

Please try to find out the reason for the delay in the clearance of the invoice from the client. Now that you are also a part of the organization, it is your duty to contribute towards making the company profitable. If you believe you have no connection to the company's profits or losses, remember that without your effort, the company may struggle to pay salaries on time.

Pankaj Painuly

Hi Sunil,

I do agree with Bhavan. With the mentioned situation, you have to compromise if you think that you are working in your dream profile. Everyone is not blessed with their desired profile and responsibilities. If you take my example, I am working as an Executive-HR for an IT company where even I faced the same problem for the last 3 months. But still, I am not looking for other options because I am most happy with my job. With hardly 8 months of work experience after my PG in HRM, I am working in a Generalist role, which is a desired role for most HR professionals.

I suggest you just sit behind and decide what exactly you are into in that particular job. If it is salary, then immediately go for another opportunity, and if it is the profile or any other things, then concentrate on what you need to do.

Regards,
Soujanya Hegde

Hi, Mr. Sunil,

In India, 70-80% of the companies pay salaries in this manner. You should be happy that you are receiving your salary within 10-15 days. In many cases, salaries are paid in installments after 3-4 months.

Regards,
R. Swaminathan

Dear Swaminathan,

Please don't say that in India 70%-80% of the companies are paying like this. When an organization couldn't pay the salary on time, what growth can you expect from that company? It's completely the chairman's lookout for payments.

Do you think when they make profits they share with you? Never. Then on what basis does an employee have to sacrifice for all this stuff? Each and every individual has their own commitment and problems. At the end of the day, if you're not paid, imagine how you and I feel in this situation.

I'm really sorry if anything is wrong in my statement. This is my view on the subject.

Good to know you,
R.K

Hi Sunil,

You have not mentioned whether it is an MNC or NC. In general, MNC companies will not behave as you said, whereas NC companies are likely to act as per their convenience. There is no law in India to regulate these NCs.

So, better don't panic and stay calm; take things as they come since we are in India, an underdeveloped/developing country.

Thanks,
Kanna

Yes, I agree with Bhavan. Basically, you have to decide your priorities. If salary is your main concern, then start looking for another job. Apart from the salary issue, if the other parameters suit your requirements, you can manage that on your own.

Thanks

Friends, I'm enjoying this post. Thanks, Sunil. Has anyone noticed variations in people's behavior or is it just responding to our friend's concern?

It gives an outlook of a person as to what he is looking for. Salary has become the major issue today. No doubt there's no free lunch concept. But this is a normal trend followed by many companies today - salary delay.

Sunil, it's just a week or 10 days. And God Bless you not to have faced these issues previously in your 8 years. I have seen companies not conducting appraisals for 2 years saying recession problems, companies not paying for 6 months as rightly said above by a friend.

What are you looking at? Are you satisfied with your job role? How many months has it been since you joined this organization? Instead of just attending your duties responsibly, what contributions have you made to stand out among the rest?

80% of people do good, they have to, or else you're no longer with the company. Companies do consider genuine reasons and pay out salaries to those; they do consider the revenue generators; are you one of them?

Finally, an important thing - You leave this company because of salary issues. You join another company. Are you going to say, "Sir, I quit my previous company because of delayed payments"? Trust me, you will not even be considered for the position unless you are exceptionally outstanding and the company is some TATA-BIRLA.

You never know the future position of your company.

Best, as said, finds out the reason for delay, how frequent are such delays, can you do anything to prevent it though it is a management concern; moreover doing research on your company, do some R&D on yourself "for what have I joined."

You will get lots of posts like these; you are the decision-maker.

Any advice/suggestions, a warm welcome!

(Please ignore the spelling; it's just the SMS fever)

Dear All,

As everybody understands, the salary must be part of the fund flow, but it is the employer's responsibility to arrange such funds on time by ensuring that employees perform and receive their funds promptly.

From my personal experience, in small organizations, the employer may misuse company funds for personal use, which adds to their liability. In such cases, there may be no alternative but to resign.

Thank you.

Dear Mr. RK,

Yes, I fully concur with your statement and view. No doubt, as you rightly said, no company is sharing their profit with the employees; they need to pay the salary on time. After all, it is the lifeline of all employees. Unfortunately, except for some MNCs and companies, most of them prioritize honoring other commitments, and salary payment takes a backseat. What I have mentioned is the ground reality, sir.

Thanks and regards,
R. Swaminathan

There is no end to this discussion as the distance between management and employees always remains. Both can try stepping into each other's shoes to see how it feels; this is just a hypothesis.

The post does not answer Mr. Sunil's concern; it simply points out the striking difference in management-employee behavior.

Hi all,

If the salary issue is happening frequently, what should be done? In our organization, we face this problem every month. When I joined this company, I received my salary on time only 3 or 4 times. I have now completed nearly 2 years here in the same organization.

I believe it is the company's responsibility to allocate funds for employees' salaries. This is essential.

Thank you.

Definitely, it is the company's responsibility. But in this case, the salary structure should be re-looked. Salary can be released for the revenue generators.

Often it happens that in a small org., some perform exceptionally well; some do not. What happens is the reward of over-achievers suffers because of non-performers. The salary structure can be redesigned to justify good performance, but this can be done especially if the employee is from the management side, like in HR.

It might be difficult otherwise for the employee to convince the higher authority.

I agree with this point.

Before opening a company, it has to plan everything. The profit and loss criteria. If the company is in profit and makes double money, it is not just doubling the salary of the employee. So if the company is now in loss, it is its duty that its employees should not suffer. Because if they will suffer, the best employees in their team will get a better job who were the main team players. This will leave the company exhausted for future growth. Because without a better team, no good captain can win a match.

It is surprising that most of us have taken this for granted and have accepted it as a norm. Why should this be? Does any of this make any sense? I can understand folks who don't have choices, have to stick around and carry on, but why should this practice be encouraged or justified? Any professional company would have this charted out when hiring or adding employees. There would also be statutory deductions and contributions like EPF/TDS, etc. Are you saying that the company would defer on its other obligations as well?

Concerns About Salary and Appointment Letter

What if the cash inflows are good, yet the employer is not providing the salary? I have been working for the past 44 days and have not received my appointment letter yet.

Regards.

I can completely understand your situation as I have gone through the same situation some time back. Despite what people like Bhavan, Swaminathan, or Deepak say, that "IT HAPPENS IN INDIA," you feel demoralized by a salary delay. In such a case, I believe you should gather as much experience as possible and seize any better opportunity that comes your way. Before joining another organization, please ensure that the company pays salaries on time. You can talk to current employees of the prospective company to confirm this.

To Bhavan, Swaminathan, and Deepak: Sirs, it is my personal belief that if a company cannot pay its employees' salaries on time, it can never prioritize their growth. Therefore, my humble suggestion to all employees is to love your job, but don't become overly attached to your company, as you never know when the company might stop loving you (courtesy of Mr. Narayanmurthy, Infosys).

Thanks,

Atul R Thakare