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Gov’t Contractors Facing Cash-Flow Deficit Amid Shutdown

The federal government’s partial shutdown is slated to run for a third week, affecting around 800,000 government employees and resulting in potential cash-flow deficit for contractors, Federal Times reported Friday.

Alan Chvotkin, executive vice president of the Professional Services Council, said a cash-flow shortage will result from contractors not getting paid by the government despite having workers needing to perform services under contract. Chvotkin noted that the financial impact of the shutdown will vary depending on the size and cash reserves of affected contractors, with small businesses facing greater risk.

Previously, the federal government experienced a 16-day shutdown in 2013 where some contractor employees were laid off and furloughed workers were not paid during or after the shutdown, the Government Accountability Office said in a report. Senate Democrats have pointed out that thousands of employees from the State Department, Internal Revenue Service and Department of Agriculture are working without pay.

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