The check is in the mail — maybe
Ms. Savitt owns AMS Earth Movers Inc., a Lake Bluff company that hauls and sells stone and has annual revenue around $2.5 million. She used to bid on Illinois Department of Transportation work, but she stays away now, in part because of the state’s well-known budget troubles. Vendors wait up to five months for payment, according to the Illinois Comptroller’s Office. So Ms. Savitt, 45, has bypassed IDOT in favor of the Illinois State Toll Highway Authority and local municipalities, which pay faster.
Illinois is holding 128,565 unpaid vouchers, payable to businesses and nonprofits throughout the state and totaling nearly $5.5 billion. That figure doesn’t include payments owed to state agencies that are waiting to submit vouchers to the comptroller’s office.
That doesn’t mean business owners should abandon the idea of supplying the state, says Hedy Ratner, director of the Women’s Business Development Center in Chicago. Ms. Ratner advises small-business owners to ask themselves if their business has the capacity to wait for the check in the mail.
“The budget is a problem,” Ms. Ratner says of the state’s fiscal shape. “Except they’re still buying goods. They’re still buying services.”
American Energy Technologies Co., based in Glenview and with more than a half-million in revenue last year, doesn’t do business with the state. The graphite products maker has contracts from the Department of Defense funding its research and development arm, says Igor Barsukov, 40, manager of business development. Most of the time, the federal government makes for “an ideal customer,” but even it occasionally falls behind. Last year after completing work for NASA, Mr. Barsukov received an IOU from the space agency, saying it couldn’t pay until it received funding itself. It took three months for Mr. Barsukov to be paid.
“You have to have enough funds to keep you running and not completely depend on government contracts,” he says.
But stories like that are rare when it comes to the federal government. In fact, in September the feds began paying small businesses every 15 days, where previously it had been every 30.
Sometimes the issue isn’t so much timely payment as holding onto a contract. Bob Carmody, 62, owns Diana’s Bananas, a Chicago company with about $8 million in sales that makes chocolate-covered frozen bananas. About five years ago the company was approached by a brokerage that supplied military grocery stores and wanted to sell the bananas on base. The company won the contract and survived a thorough inspection.
When sales on base started to trail performance at civilian grocery stores, Mr. Carmody wanted to suggest price points and marketing strategies that would move the product. But he couldn’t get an answer from the brokerage, which had always dealt with the procurement officers for him. The contract was not renewed.
“It was going very well, and then it didn’t, and I don’t know why,” he says. He suggests that vendors “build your relationship with as high-a-level liaison as you can find and keep that (communication line) open.”