Getting Paid by the GovernmentPosted: October 30, 2013
Recently I sat down with our regular guest poster Eileen Kent for an interview, only this time she asked the questions! You can listen to our entire conversation at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show, and you can also read our discussion about LinkedIn as a networking tool for federal contractors.
Eileen: I have a quick question in regards to small businesses contracting directly with the government. Getting paid from the government isn’t so tough as it is getting paid from a prime, do you agree?
Bill: That’s correct because the government has an obligation. They specifically run according to some obligations about everything that you’re going to do and how fast it’s going to be delivered. And this has actually gotten way, way easier now because it’s all been automated (while primes can be slow to pay).
Everything you do through DFAS, the Defense Financial and Accounting folks, is completely automated, and the money comes to you on a lot better basis than it used to. For a company like TAPE, what we call ‘Day Sales Outstanding’ or DSO, is running around 45 days. In the old days, 60 to 75 days was not at all unusual.
Eileen: Forty-five days in this marketplace, that’s not too bad.
Bill: No, not too bad at all. Absolutely.
Eileen: So do you suggest that small businesses start thinking about finding a way to make it in for themselves as the prime, if they can?
Bill: That’s correct. And there are ways in which you can do that. It’s about talking to a customer and establishing a set of relationships and then going through the process of obtaining an actual prime contract of your own. Those things are exactly what we need, all of us.
It’s important to understand the difference between being a prime contractor or a subcontractor. As a prime you’ll have a much more decent relationship between you and the actual customer. But it’s important to note, if you have a prime, that the prime is your customer and you have to build a relationship with the prime just like you would with any other customer.
Thanks again for the interview, Eileen! You can listen to our whole conversation at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show.