UACES Facebook Show Me the Money
skip to main content
CED Blog

Show Me the Money

by Max Franks - March 16, 2018

For many small businesses, cash reserves are small and you sometimes work from week to week or month to month. So what happens if you do not get paid on time?

In government contracting there are procedures that must be used to pay any order for supplies or services. Remember, no payment can be made without an invoice, and the invoice must show acceptance. When a product or service is delivered or project finished, the contracting officer must have a report that the product is the correct item requested and the project is completed to specification. We will call this acceptance.

I want to use some recent examples of issues small businesses have had to show how to use those procedures.

First, I had a contractor provide some wood pallets to the government and then invoice them in the Army’s online invoice system, “Wide Area Work Flow”. But when the Army paid the invoice they only paid part of the invoice price. The contractor could not communicate with the contracting officer who was on leave, they called their local Procurement Technical Assistance Center (PTAC) and we communicated with the small business office at the delivery site and they re-billed the missing part of the invoice. The contractor was subsequently payed. In this case the delivery count was wrong so they were only short paid. In the 21st century we are moving to online invoicing only, and communication is the key. Only the contracting officer can approve payment and only after acceptance of your product and or service.

Second, I recently had a company complain of not being paid and the contracting officer claimed he had paid them. On investigation, we found the company had changed banks and had not updated their financial information in the Systems for Award Management (SAM). Since modern payment systems are linked back to SAM, payments will be processed through the financial institution you add to your federal vendor record. So, in this case the government had to track down the money and the contractor had to wait 30 days extra to be paid.  

Third, what if you are a subcontractor on a government contract and have not been paid? The first rule of subcontracting is to have a signed agreement to provide your product or service. Include details such as delivery terms and payment, so if you are not paid because the prime is not being paid, you have recourse. While the government clause states that the subcontractor should be paid within seven days of the prime contractor being paid, the government contract is with the prime vendor. In most cases the subcontractor will have to take civil action against the prime contractor if a payment issue is not resolved.

Finally, all vendors must remember that payment cannot be done without the proper invoicing and acceptance sent to the contracting officer. Also, it is your responsibility to make sure your financial information is correct in SAM. Ensure that your SAM profile is active and you update it annually. An inactive account will cause payment issues even if the project or product are delivered on time and invoiced.

For small business, payroll and expenses are funded by profit from sales or finished project. Invoicing to keep your cash flow strong should be propriety. When you have an issue with payment contact your Arkansas Procurement Technical Assistance Center and let us review the options and help you find a solution. 

Photo of Max Franks

 

Top