Last week my ears perked up when President Obama announced that the government would pay small businesses with government contracts, including GSA contracts, more quickly.  I can already hear some of you skeptically saying “sure, I rarely get paid within 30 days already."   I understand, but then again, if they can make this work, then  many small businesses will receive payments much more quickly.  President Obama did not mention any details at the time but today SBA announced the details.  Currently required by law to pay within 30 days of receipt of a properly prepared invoice,  the QuickPay program cuts the time in half, to fifteen (15) days.

The government hopes that the quicker payments will increase cash flow so that small businesses can expand their business and hopefully, create more jobs.  You can read more by visiting SBA’s web site.

One question that immediately comes to mind though, concerns the many small  GSA contractors who have prompt payment discount terms built into their GSA contract.  An example of such prompt payment discount terms is 1%, 15 days.  Now that the government is required to pay within 15 days, will purchasing people still apply the prompt payment discount to the invoice.  If so, it hardly seems fair to those GSA contractors who negotiated this point in good faith, hoping to get paid sooner.  Why should they need to honor the 1% discount when others who did not give that discount to the government will receive the faster payment benefit at no discount.

I am hopeful that GSA will address this quickly, and perhaps they already have advised Federal agencies what to do.  I have questions out to GSA about this point and will report back what I learn.  If you are one of those small business GSA contractors who have a prompt payment discounts of 15 days or more, perhaps you should make similar inquires of your  contracting officer.

UPDATE JULY 2012:

The OMB issued additional guidance to agencies to ensure that small businesses get prompt payments.  See Prompt Payments.  

You can read more about DoD's Prompt Payments to Small Business Policy.