Your contract can be successful and profitable for both your company and for your government client, and you’ll still find an issue. The issue may lie in invoicing for a government client – potentially more problematic than first thought due to government systems.
Transparency and Accuracy
Believe it or not invoices are checked carefully when they go through the financial management system within government. Particularly if there have been inaccuracies and/or overcharging in the past, not hard to do in some high volume automated services such as data, telephony or training. I have heard of $000,000s being recovered over time by going through past invoices line by line and querying irregularities.
In this setting the contract management team can get pretty annoyed if the invoice is ambiguous or doesn’t match up with a work order when they reconcile the two. When this happens they will instigate a dispute claim and take it to the next service delivery meeting in two to four weeks time where it is thrashed out with the supplier’s Account Manager. If it can’t be sorted out there the matter is escalated up to more senior players on both sides. Why does this annoy them? Because it takes time, sometimes up to three months, holds up the reconciliation of accounts and can make forecasting future expenditures much more difficult. Better to make sure you get it right in the first place.
Government agencies typically pay creditors at the end of each month. To do this they need to receive invoices about two weeks earlier so they have enough time to verify the details (refer above) and arrange payment. Interestingly, there have been cases where companies have lodged invoices two months late or more. Apart from suggesting you make superordinary profits and maybe don’t need the money this practice creates real problems for the contract management team.
Firstly it disrupts the monthly reporting schedule they have to comply with under the accrual accounting system that is now in place throughout government. Secondly, in high volume transaction environments the information can quickly become “aged” which makes it difficult to go back, query an item and take it through to final resolution.
A Minor Matter, You Say?
Minor matters you might think and in the great scheme of winning projects to keep your company and staff going forward you are probably right. However they are important to some key people who can really influence how your company is perceived within their Agency. The issues are so significant you often find something like Account and Relationship Management listed high amongst the assessment criteria of the RFT when it goes to market. And we all know how important assessment criteria are in deciding who wins the tender, don’t we?