SPRINGFIELD — Vendors facing payment delays have lost another lifeline for getting what they are owed.
The Vendor Payment Program gets cash quickly to vendors who have provided products or services to the state but have not been paid. It has been temporarily suspended because legislators and Gov. Bruce Rauner have not agreed on a permanent state budget.
State officials said a similar program gets around the problem of the state not having a budget. However, the website devoted to the Vendor Payment Program makes no mention of it.
“Please be advised that the Vendor Payment Program is temporarily not available until a FY16 budget is enacted,” it says in red letters at the top.
The program is run through the Department of Central Management Services.
“Because the VPP was initially designed to address the bill backlog that arose during the Quinn administration, the program relies on the issuance of vouchers by the Illinois comptroller as documentation of the assignment,” spokeswoman Meredith Krantz said.
“The comptroller is only able to produce a voucher if there is an appropriation, court order, consent decree or some other legal basis for payment. In some limited circumstances, the VPP may be available for vendors which are providing goods or services for which payment has been authorized.”
But not all payments have been authorized because of the impasse.
“CMS initiated a program, the Vendor Support Initiative, which is substantially similar to the VPP, except that it does not require a voucher to be processed,” she said.
The Vendor Payment Program was created in 2011 in response to the state’s record of being chronically late in paying its bills. Comptroller Leslie Munger recently said that the backlog had climbed to more than $7 billion and is on track to hit $8.5 billion by the end of December.
No state money is directly involved in the VPP. Vendors are paid by approved private companies — CMS has OK’d six — that front the money, take over the bills and collect when the state pays up.
The companies pay the vendor 90 percent of what the state owes them. The companies are also entitled to the 1 percent-a-month late-payment penalties that would normally be paid to the vendor. The companies pay the vendor the remaining 10 percent once the state makes the payment.
Not every vendor can participate. Medical assistance bills do not qualify, for example. Also, the bills must be eligible for late-payment penalties and they must be at least 90 days past due before they qualify.
One of the participating companies is Vendor Capital Finance of Downers Grove. CEO Le Chen said there is interest among vendors in the program, but the company is unable to help them.
“There are plenty of people calling, but unfortunately they are vendors. Even if the Vendor Payment Program was current, they wouldn’t have qualified,” Chen said. “Their receivables didn’t fall under the purview of the prompt payment program.”
In other words, the bills weren’t eligible for late-payment penalties.
“Child-care providers, senior assistant-living homes. Those things are more Medicaid/Medicare and not within the realm of the Vendor Payment Program. Based on discussions with our clients, there is an incredible amount of hurt out there.”
Last year, CMS said, 107 vendors assigned their bills, worth more than $152 million, under the program.