Faster Government Collections
George Gingerelli, chief executive of Delta Research, an Arlington, Va., environmental-compliance consultant, was in a serious bind five years ago: most of his company's sales, then around $5 million, came from U.S. government contracts, but the Feds were notoriously slow payers. "Our invoices would go into a black hole," he says.
In desperation, Gingerelli developed a collection strategy that might seem farfetched, except that it worked. "We started hand delivering our invoices to the appropriate government agency in Washington and then, once the invoices had been approved, personally bringing them up to our payment processor in Philadelphia." An in-house cost-effectiveness study showed that this system, which remained in place for nearly two years, cost about half as much as borrowing against overdue government receivables.
Then the federal government consolidated its payment operations in Columbus, Ohio, which made hand delivery too expensive to continue. "We continued to be very aggressive about our collection efforts, which now take the form of frequent phone calls whenever a payment is more than 30 days late," says Gingerelli. Now he recommends the following strategy: "Get to know the person who's been assigned to monitor your account and try to maintain an amicable relationship. Keep calling, even when you don't get an answer."
Then, if payments continue to be slow, ask for help from your administrative contact at the government agency you're serving. If all else fails, contact your congressional representative. "I know two companies that did that," Gingerelli reports, "and they were paid the next day." -- Jill Andresky Fraser