Veterans Business Resources

a portal for all Veterans and SDV Small Business Owners

Payment; Terms and Conditions

Just in case you have a business where you also have suppliers – and those suppliers make it possible for you to provide a product or service to the government, it is critically important to understand your cash flow/payment terms and conditions.  Said another way, you don’t want to have to pay your suppliers before you get paid.  Not a problem you say, you’ve got it covered.  Really?  Let’s take a look. 

You have to work 30 days before you can submit an invoice for payment.  The government then has an additional 30 days to pay you, assuming everything is exactly right on your invoice and with your invoice procedures.  It just so happens your invoice is not exactly right.  Somehow the government manages to hold your invoice 25 days before alerting you that it is not exactly right – then they send it back to you and you make all the necessary corrections and resubmit.  You got it exactly right this time!  Great!  But your 30 day clock starts anew when the government receives your invoice.  You anticipated something like this might happen so you negotiated extended payment terms with your suppliers, but you only asked for a 75 day payment plan.  The little scenario we just described is going to take more than 75 days to sort itself out.  

How many times can your company afford to pay out money without bringing in money?  Just something else for you to consider as you build your business.  Cash flow and the payment terms and conditions you negotiate can make or break your business.

See you on the high ground!

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