How to speed up the payment of public contracts and relieve struggling firms during Covid

During the COVID crisis, governments around the world have been wondering how to expediently put money in the hands of millions of struggling firms. In an earlier post, we have suggested that one possible way to achieve this goal is for governments to timely pay all receipts due. Paying the private sector on time for work already done is not just about having cash on hand. It also prevents companies from taking up further debt in order to survive. The evidence is clear: the faster the government pays its dues, the fewer firms need a loan.