By Karen Axelton
Good news for small companies that do business with the federal government: President Obama has ordered all federal agencies to speed their payments to small contractors, Federal Computer Week reports.
The government currently awards about $100 million in contracts to small businesses annually, and can take up to 30 days to pay companies owed money for products and services. The new “QuickPay” plan, announced September 14, requires federal agencies to cut checks in 15 days, instead of 30, once they receive a valid invoice, Federal Computer Week reports. The change applies only to prime contractors.
“When small contractors get their money in 15 days instead of 30, it results in a permanent infusion of cash flow into their businesses,” Small Business Administration Administrator Karen Mills said in a statement. “Their financial footing gets stronger — permanently.”
Joe Jordan, associate administrator of government contracting and business development at the SBA, told Federal Computer Week that the 15-day payment will benefits small businesses without forcing agencies to change or modify their automated systems or processes.
If you work with the government, however, keep in mind some important phrases here. First, “prime contractors”. If you’re subcontracting to a large business, as many small businesses do, this change won’t directly affect you. (On the other hand, if you’re subcontracting to a small business, you’ll at least know that the company you’re working for is getting paid faster, which may trickle down to you.) The other phrase is “valid invoice.” Keep in mind an invoice can be rejected for many reasons, from an incorrect address or purchase order number to a wrong date. Confirm the format and information that the agencies you work for want to see on your invoice, and make sure every invoice complies.