How to Overcome Key Challenges with Illinois Vendor Payment
To address the crisis that is currently the backlog of Illinois vendor payments due by the state, in October, Governor Rauner borrowed more than $6 billion to begin paying off those bills. This backlog initially totalled over $16 billion and certainly included payments owed to construction companies. As of December 2017, the state still owed over $9 billion, a number that seems daunting to anyone still awaiting payment for work performed.
As the Republican governor and the Democratic legislature fought over spending, contractors continued to work, racking up payments owed and accruing interest at the rate of 12 percent per year. By issuing a series of bonds, the Governor is transferring the debt from the contractors waiting for payments to willing lenders. The state estimates that, by June of 2018, these debts will be cut to $7.5 billion, half of what they were but hardly where contractors owed money would like them to be.
Illinois Vendor Payment
The Illinois Comptroller website offers vendors a chance to check on their payments and view non-confidential remittance information. They also show clearly how the state is doing paying the backlog of claims and how many are still outstanding. While they are working to increase transparency and payments, the huge backlog makes this problem difficult. Further, the state of Illinois has a reputation for being slow to pay bills and many contractors are less than enthused about relying on the government to solve the problem they created.
Illinois Vendor Assistance Program
The Vendor Assistance Program, LLC has sprung up to address the challenges of being paid by the state government in Illinois. This program will buy the invoices from contractors and then works to collect the amount owed and interest penalties due. This works for contractors who are getting paid for at least the bulk of the invoice (90 cents on the dollar) and for the company, who works to collect these invoices.
Other Options
Going long periods of time without being paid can be difficult for any business, but especially in the construction industry where there's a chain of payments that must be made. Knowing how long the state takes to pay its bills and still wanting to work for the government, it is wise, where possible, for contractors to ensure that their projects are bonded and payment from the bond company will be forthcoming. For businesses with the ability to wait until the state finally makes their payment, collecting the 12 percent interest penalty may soften the blow on the unpaid amount.
For help navigating the changing waters of Illinois' vendor payments and collections, you can reach out the the team at National Lien & Bond. Depending on your specific situation, we can recommend a solution to ensure your protect your right to payment, help you find a way to convert your invoice, or come to another arrangement that works for your unique situation. If you're interested in seeing what we can do to help you, contact us today to set up a free consultation where we discuss your specific problem and possible solutions.
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