The Agenda

How small-business issues are shaping politics and policy.

In September, The Agenda reported about the Obama administration’s QuickPay program, an effort to reduce payment time for small-business invoices from 30 to 15 days. Earlier this month, a reader, Paul Kakert of Davenport, Ia., wrote to express his skepticism.”Sure, it sounds good. Paid within 15 days,” he commented. “But within 15 days of when?” He went on:

“It’s not 15 days from the date of invoice, which in the commercial business industry would be the norm. It’s 15 days from whenever the government gets around to approving the invoice. What the president fails to take into consideration is that the layers of government inadequacy can take weeks to approve an invoice submitted by a small business.”

I put Mr. Kakert’s question — “within 15 days of when?” — to Moira Mack, a spokeswoman for the White House Office of Management and Budget, which issued the new guidelines. It turns out Mr. Kakert is right — it’s not 15 days from the date of invoice. Or rather, not just from the date of invoice. Ms. Mack quoted from the memo, which said, “To the extent practicable, federal agencies shall establish a goal of paying small-business contractors within 15 days of receiving proper documentation, including an invoice for the amount due and confirmation that the goods or services have been received and accepted by the federal government.” To some owners, that may sound like 15 days from whenever the government gets around to approving the invoice.

In the commercial world, standard payment terms have typically been 30 days from the date of invoice, but corporations have been stretching that to 60 days or longer, according to Jeffrey Leonard, a venture investor who wrote about the new normal for The Washington Monthly.

That point was emphasized by Joseph Jordan, the Small Business Administration’s associate administrator for government contracting and business development. “When I talk to small businesses about getting paid by the government versus getting paid by the commercial sector, in terms of turnaround, they’ll take being paid by the government seven days a week and twice on Sundays,” said Mr. Jordan, who acknowledged that there could be approval delays. “When you’re talking about five to eight million contract actions a year, are there bound to be issues with some individual contracts? Absolutely,” he said. “But by and large, the government pays its bills very promptly.”

The White House, he continued, “is definitely looking at the total through-put time. There’s a clear place where we had control — cutting the 30 days in half. The president took all these factors into consideration and said let’s do what we can and cut payment time from 30 to 15 days.

“Let’s not make the perfect the enemy of the good.”

Article source: http://feeds.nytimes.com/click.phdo?i=4b6787ea12b74d8809b638fe8d3c53fd