Late payment has been such a perennial issue that it crops up every time government project is mentioned. While the agreement may clearly indicate the payment cycle to be 30 days, you will probably be surprised to see that no payment is made even after 1 year.
In business, cash is king and if you don’t have any, disaster is just around the corner. Stacks of invoices cannot pay your staff salary; cash can. If the pay is late and you are desperate for cash, what are you going to do? Sue them?
2. Not sustainable
Just like you cannot live forever by exchanging cash for oxygen, you can’t survive solely by contracts from the government. Unfortunately, banking on special status and privilege, many go all out to win the government’s heart, thinking that the green leaves will always stay green.
They thought a 2-year contract can always be renewed and lasts them 10 or 20 years. To them, there is money in the promised land so so why would they work hard and expand their business to the private sector?
3. Drown in complacency
Business solely built with the purpose to serve the government will be up for a harsh reality check. It is probably stupid to think that there are people who set up business just to get business from the government, but apparently they do.
Once a 3-year supply contract worth millions dollar is signed, some go for spending spree and buy their first million dollar home, a Porsche and a yacht, even before receiving payment. When the contract is over, only then they realize they are in deep hole. For some reason, such as political factor, economy downturn and recession, a 5-year long term business can be cut into 1-year, or even less. Is it shocking? No.
4. Not indication of real competency
It has come to realization for those long in the business that the government contracts are not always won by the most competent company which offers the best price and quality. Rather, they are won by those who bend the rules. In a perfect world, the government departments are supposedly manned by transparent, honest and squeaky clean officers and personnel. In reality, many are run like real suckers and end up corrupted worse than the Gotham and Harare cities combined.
5. You be the scapegoat
Government and those with power enjoys playing the goddess and it comes as a little surprise for them not to admit the mistakes on their part when things go wrong. There have been cases where goods, parts and buildings were delivered and built below the standard when they know that the contractors are incapable to deliver the job in the first place.
As a result, you take the blame. After all, they are paying you with the people’s tax money and hence they are answerable to the public. For all you know, you reputation goes up with the smoke, and you probably ended up sued or even thrown into jail.