Paying it Downward $$$

Collecting the revenue you have earned by providing your product or service is not only how you stay in business but how you pay for your business.

Too often larger companies, particularly those acting as Prime Contractors, take advantage of smaller businesses by expecting them to float or bankroll their projects. Insisting that subcontractors must wait for payment until the Prime has been given payment from the ultimate project owner known as a ‘pay when paid’ policy,  unfairly forces smaller businesses to carry the bigger firm’s burden. And many of those smaller businesses may be Women/Minority/Disadvantaged Enterprises who do not have access to the large lines of credit the Prime’s carry with a Bank.

We have a client right now that is in this situation. We brought in our attorney to review legal options.  And to my client’s surprise there are some effective remedies to force payment.  Hearing that success for other like-minded firms has been achieved, gave our client hope that future contracts can and will be negotiated. And, if not, we move on to other clients, those that pay within 30 days.

If you are an owner of a project or a Prime and many of your contractors are small businesses, take note. They should not have to wait longer than you do for their wages. They, like you, have monthly bills to pay, bills that are not so forgiving after the due date.  Using excuses that funding is not in place or the owner hasn’t paid us yet is simply an attempt to avoid payment. Tell that to their subcontractor’s bank expecting a mortgage payment, the bank requiring the monthly car payment, their families who are also relying on that consistent stream of revenue.

Small business owners and sole proprietors should not have to rely on spouses, family members, or friends to tide them over while they await payment. And most do not qualify for small business lines of credit if service providers. It is a nasty cycle that is hard to step out of when your bills are always late because you are always receiving payment late. A declining credit score shows no mercy.

If you are a Prime or a Government Agency overseeing a project, know this, it is wonderful you receive a paycheck every two (2) weeks but what about those risk takers on their own, your sole proprietors or small business subcontractors, without which your project could not be completed?

No excuses, pay in 30 days, use your bank line of credit, or you may risk mechanic liens, collection calls, lawsuits, reputation risk to name a few. Small businesses fuel the economic engine of many projects, do not be the reason they run out of fuel.