France Late on $2.2 Billion in Payments to CompaniesJune 04, 2010
The French government is $2.2 billion in arrears on payments to defense companies, falling behind because of a switch from SAP to the Chorus accounting system, Defense News reported. The late payments have strained defense companies to a breaking point because of serious cash flow issues, according to Christian Mons, the president of GICAT (France’s land systems association). Smaller companies face collapse while larger companies are withholding payments to their suppliers and contractors. The French Ministry of Defense confirmed the late payments between January and April, and said the government has hired temporary staff to process the payments and hopes to clear all late invoices by the end of this summer. The GICAT trade body has instead proposed that the government write a single check to cover 80% of the amount owed to the companies to speed up the process. Dealing with each invoice individually is too slow and is burdening the companies' cash position, Mons told Defense News. The companies are turning to bank loans to stay solvent — a costly way to finance business that, in effect, is financing the government. The French Ministry of Defense is studying the single check proposal, according to a government spokesman. |
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