When Government Cuts Costs - Small Business is Often the Last to Be Paid!

If you own a small business and you've survived the recession in part due to your good fortune in having government contracts to keep you afloat, well, then you know that it's all about cash-flow and despite what many people think the government doesn't always pay its bills on time. Oh sure, sometimes it does, and some government accounts do, but as local governments run out of money as they are now due to lower tax receipts, they are unable to pay their bills on time.

If this is beginning to happen to you, well I feel your pain, actually, I've felt it myself, albeit in the 80s and 90s during economic downturns. Indeed, this is a real problem, before retirement our company cleaned fleets of vehicles, and about 30% of our business was fleets owned by government agencies (all levels of government) and in the 80s, I cannot tell you how bad the receivables had gotten, 120-180 days out was common, it was a nightmare.

Many small businesses think they are set to have government contracts, not so, you become their bank, and when they cut budgets or run out of money, you don't get paid, it's crazy. Most people don't realize how they use the business community, state governments are the worst, your money comes out of another area or region usually, and they don't care, and when they cut staff, they don't return calls either.

Are corporate accounts better than government accounts then? Well, some are and some are not, and it often depends on what industry sector we are talking about, for instance right now it might be rather tough to be working in the real estate sector. Of course, many service businesses are doing okay, thus, if you have accounts with large corporate service oriented businesses, you might be scratching your head as to what I am talking about; see that point?

In the end a small business must get paid on time, and cash flow is king. It's not the size of the account, rather it is the money flows. In fact, the larger the account the more problematic it can be when that check is late, after all, small businesses must make payroll, otherwise you are out of business. Likewise they must pay their rent, suppliers, and taxes or well, your game is over. It is my contention that you consider all this and have a strategy to stay in the fast flow or money, and watch your cash reserves during this period. Think on it.

About this Author

Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes it's hard to write 20,000 articles; http://www.bloggingcontent.net/

Note: All of Lance Winslow's articles are written by him, not by Automated Software, any Computer Program, or Artificially Intelligent Software. None of his articles are outsourced, PLR Content or written by ghost writers.

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