Looming Offsets Threaten Cash Flow
February 16, 2011 
5 Comments
In the most recent “DP3 News U Can Use” newsletter, there was a small article headlined “Implementing Offset Payment Process”. Although the article was brief, and very matter of fact, it should serve as a warning to TSPs about a potential upcoming disruption to their cash flow. The article stated:
DOD is currently testing household goods offset procedures in accordance with provisions outlined in the 400NG, International Tender, international and domestic solicitations. The test is scheduled to run for 60 days and if successful it will be implemented throughout the Department.
As part of the transition away from payments originating from DFAS and toward payments through US Bank’s Payment system, the government has been developing a new procedure for withholding money from TSPs for overcharges or claim settlements. While they have been working on this new process, they have been preventing from collecting offsets due to the lack of payment funds through DFAS. It appears they are close to implementing the new process to collect offsets through the US Bank system, and TSP should be prepared for the resulting disruption in cash flow.
It is unclear how much money is currently owed to the government by TSPs, but we have heard some large estimates. If the military claims offices and GSA decide to withhold all payments until that full amount of the backlog is satisfied, there may be some TSPs who will not see any money flowing to them for some time. There have been some requests from industry to implement the offsets gradually, so there would not be a complete disruption in cash flow, but there have been no indications that will be done.
TSPs would have received notifications from GSA and the military claims offices, and may have assumed that they money has already been deducted. To prepare for this upcoming wave of offsets, TSPs should review past notices and try to determine if he offsets have been satisfied or are still pending. If they is still pending, then the TSP should prepare for it to be included in the flood of offsets which will be arriving soon.
Related Posts
- GSA Starts Issuing Offsets for Outstanding Overcharges - February 23rd, 2012
- TSPs Encouraged to Contact Claims Offices and GSA Prior to Upcoming Offsets - March 22nd, 2011
- Audit Exception Change Continues to Cause Cash Flow Problems - July 8th, 2011
Using their past logic, they should implement this program right before the busy season, like they did DP3. When the TSP’s can’t pay their agents, that will certainly improve the service the military members will get…at least the first few, because if the agents are not paid, the last to move, might not have a mover.
Wow, I guess I was unaware that the offsets haven’t been happening over the last couple of years. I have always liked the “pay as you go thing” so I don’t believe that my company is looking at any future offsets of any real consequence. (We write checks when we get a “Demand on Carrier” notice)
But since (seemingly) some “big numbers” have been thrown up with regard to “future offsets”, it may be possible that certain players in the industry may be on a different page.
From my observation of things over the last couple of years I have to wonder about the possibility that some carriers may have encumbered huge obligations as a result of the ever present cargo claims, PLUS the almost certainly extensive inconvenience claims encountered when shipments accepted for DPS were delivered days, weeks, and even months late.
This might be a time for agents and drivers to review their accounts payable.
I wonder who wont get paid if and when a carrier fails due to 2 years worth of offsets being withheld right in front of the peak season? Anyone who has been in the business for more than a few years, and has been paying attention, already knows the answer to this question.
I have to wonder just how much money might have been collected from agents and drivers to pay claims that really haven’t been paid yet? (Another “WOW” moment)
If my pure conjecture turns out to be factual, then very bad things could be in our future. Yes, things can get worse.
While it may be a good idea for agents and drivers to review their “accounts payable” as well, I meant to advise that they review their accounts receivable….
“This might be a time for agents and drivers to review their accounts payable”.
This is a great idea, why is it that we must hunt down some carriers and beg for our money. I have one TSP that we performed destination services back in August 2010 we were promised a check 11/15/10, and we continue to be told its on next weeks check run. Funny thing next week never comes… When this problem was presented to SDDC. as per the tender of service if a carrier can’t pay his invoices in 180 days they will review and take action. However their response is we do not interceed with the TSP and Agent relationship go seek Legal Recourse. They seem to forget the fact if an Agent can’t get paid who else is not getting paid.They seem to forget what has happened in the past when a carrier goes out of business. Shipments get stranded all over the world and having tobe rebooked at additional cost to the Government and undo hardship on our service members and family. It is their fiduciary responsbilty to confirm that the TSP still meets the Finicial ability to remain in the program. This can only be done by convening a carrier review board, not by turning a blind eye to a complant lodge by an agent. We are the one’s that can see that the TSP does meet have the abilty to pay their bills when presented, and paid in a normal amount of time. Powertrack pays in less then 30 days why should the srevice provider have to wait 6 months or more to seek help from SDDC. Only to be told the answer not our problem. Then who’s problem is it???????