As a “petty” contractor building retaining walls along the Wangdue-Tsirang highway, Aum Tashi had a problem with the accounts officer. He would never release her bills (money) and cite petty reasons for the delay.  Sometimes, she would doubt if he is expecting a share of the bill for doing his job.

That was the case, not long ago, when getting payment for the work done was the biggest issue with contractors. Many wished for a system that fast-tracked payment that would enable them to roll their cash and take up more work.

The Bill Discounting Facility launched on Tuesday is what contractors, big or small, have wished for. The facility aims to improve liquidity in the construction sector by providing timely access to funds and ensuring smooth business operations by addressing cash flow gaps. In other words, converting receivables into immediate cash. 

Contractors welcomed it, as it would alleviate the stress caused by cash flow disruptions. A common complaint among contractors, notwithstanding the size, is the payment issue. Not getting paid for the work done is so common that it has become a popular excuse to delay payments to other parties involved. “Bill mathob”  is a popular term and excuse to delay payments. While it may sound simple, it has repercussions.

Delay in payments hampers business. In the private sector, it hampers quality of construction and growth of the sector. If the facility is a globally recognised financial tool that fosters business growth, encourages competitiveness, and drives economic dynamism by promoting innovation and expansion, we should expand it.

With added benefits like ensuring steady cash flow, reducing reliance on high-cost loans, and minimising the risks associated with payment delays, the facility could help prudent management of our scarce resources. If it can help contractors complete projects on time and maintain stable operations, we will not see many audit observations of delayed works or wasted resources.

A common complaint among companies or organisations outside the government is what is called trade receivables, or money agencies owe. The Royal Audit Authority (RAA) issues memos for not collecting bills (money) for works executed and often comes hard on agencies answerable to the RAA. Like the Bill Discounting Facility, a new facility perhaps could be issuing audit memos to government agencies that owe money and sitting on it for years.

The facility will help contractors resolve issues caused by cash flow disruptions. It could, going by the concerns of many in the private sector, resolve the dependence on accountants and finance officers to “release bills” for works completed without having to get harassed or expecting something in return.