EDITORIAL – The ins and outs of government’s cash flow

Several recent news stories have suggested that government is shifting its tactics toward people who owe it money. Good. Not only are the receivables overdue, so is the need for policy change.

In recent weeks, the Health Services Authority has announced plans to hire a debt collector to go after $58 million in past-due accounts from patients, the Department of Immigration is seeking to recover more than $4 million in unpaid permanent residency fees, and the police are arresting people for neglecting to pay traffic tickets.

In the case of the HSA, the public healthcare system was laboring under a policy where the agency could not sue residents for medical debts, and also could not write off bad debt on its balance sheets. The result was the accumulation of some $90 million in hospital debts that the authority, frankly, could do little about (either in a practical or an accounting sense). That contributed to an attitude among the Cayman community that at the public hospital, healthcare was “free.”

That, of course, is unacceptable, and the HSA should have, and should exercise, the right and the means to pursue money that is owed to it, and by extension to us, the taxpaying public.

That being said, even most felony offenses have statutes of limitation — and much of the debt owed to the HSA is more than six years old; further, we are aware of instances where patients never received a bill from the HSA in the first place. How can that possibly be?

For any business or enterprise, the most fundamental cash control mechanisms are “accounts receivable” and “accounts payable.” Billing must be timely — usually within 30 days from the time services were rendered — and receivables must be attentively managed and “aged.” When receivables go beyond, say, 60 or 90 days, red flags should be automatically raised, and follow-up should immediately ensue.

Every CEO, CFO, CPA, chartered accountant or comptroller knows this, raising red flags in our minds about how these HSA debts have been allowed to go unattended to for so many years. Where, we ask, is the accountability?

Then there’s the situation in which many of the 473 individuals who owe fees related to permanent residence now find themselves. As pointed out by Deputy Governor Franz Manderson as well as attorney Nick Joseph (if there are two people who know more about Cayman’s immigration than they do, we are hard-pressed to think of them), many of those individuals are people with close, even familial, Caymanian ties, who may have never been aware they had to pay PR fees, or may have legitimate legal arguments that they in fact do not owe those fees at all. Others have already had their status revoked and/or have long departed from the islands.

Meanwhile, Cayman’s government itself is notorious among the local business community for being slow to pay its bills. Months can pass before a company receives payment for an invoice sent to government, and this can be devastating to small businesses which rely on tight cash flows to pay their employees and vendors.

Government’s issues with money going in and going out should not be issues at all. Money owed to government should be collected, and money owed by government should be paid. Promptly.

 

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1 COMMENT

  1. Now that we have some people in Court and in prison for missing funds from these said Government Departments , how can the Government go after these long over due debts ? Some of the people have gone on , and some have left the Islands .

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