OK the government shutdown is over and everything is back to normal, right? Well not quite. It will take some time for the furloughed government employees to catch up to their workload, not to mention that with the holidays, normal FY Q1 activities make the government slower than normal this time of year anyway. Now add to that the backlog of work due to the government shutdown and the workload is overwhelming to most government employees. This will mean that things take longer to accomplish here in the short-run until everyone can catch up. Add to that the effects of sequestration, which everyone feels will be harder to implement this year than it was last year, and the effect is a real slowdown in processing work. This means a slowdown in issuing new contracts and a slowdown in processing payments. This is not to mention a slowdown in processing new RFP's or evaluating new RFP's. Every activity is likely to take longer. This could have the largest effect on small business and small business financing. It will definitely slow down cash flow for small business as well as impact their revenues and profits in the short run. We have talked about this before and small business should evaluate how to deal with these issues.
Probably the biggest issue facing small business that is a Federal Contractor is survival in the short-run. This means alternate plans for financing as well as how to keep the business running while looking for new opportunities and pursuing new opportunities. In other words, if the government is slow to pay, what happens to the cash flow in the small business? Depending on the overall content of government vehicles to the company's revenue stream, this could have severe impacts on cash flow. This is the lifeblood for any business. Certainly if you have a good relationship with your bank, you may approach the bank for some help. If you have some of the 4 F's around, you can use that too. (what are 4 F's?). I met Joe Sillay at a conference last year and his company can help companies that find themselves facing a possibility of this type of gap. But in talking with Joe, he recommends that the company be proactive and approach him before the shortfall becomes too serious, if possible. I would recommend talking to Joe today if you think a contract, or some payments, could be delayed to your small business in the near future.
The most important thing for small business owners to do right now is to pay attention.
- Pay attention to what is happening in the agency that you are working with. What are that agency's plans for the 2014 budget and what will the impacts be from sequestration?
- Pay attention to your contracting officer. What does the contracting officer think about your specific vehicle? Will it be funded? Will there be delays? Will it be reduced in size? Will you need to partner in order to participate?
- Pay attention to delays in awards and payment vehicles. Make sure you understand how to process invoices for payment. Don't let a process error delay further your funding.
- Pay attention to possible changes in the contract or grant that could cause delays.
- Pay attention to the continuing resolution and the possibility of another shutdown.
Now, more than ever, is time for companies that work with the Federal Government and Federal awards to make sure that you are compliant and doing things right.