There is an interesting article in the Daily Variety about the cash crisis and related issues at Rhythm & Hues. You can read it here: VFX House Rhythm and Hues Endures Cash Crunch
1. A production company will of course have a cash reserve that they have carefully built up to tide them over the unevenness of payments and down periods. But that reserve will go very quickly indeed. It is one of the reasons it was healthier when a studio could balance their production across several different industry areas (e.g. advertising vs motion picture vs special venue) to maintain some income when one area was depressed.
2. Boss Film Corporation (BFC) was doing the visual effects for Hunt for Red October and was being treated very harshly by the studio and the director of the film. There are many potential reasons for this, but I doubt it was because Boss was completely screwing up. There were (past tense, Boss Film Corporation is no longer in business) many excellent people at BFC and Dave Stewart certainly knew how to shoot "dry for wet", as it is called. Mike Fink was called in to help supervise, and ultimately the production was pulled from BFC and given to ILM with a change in schedule (more time) and budget (much more money). ILM did a very good job, of course and they charged Paramount a lot of money to come in at the end and do this production. Paramount, being cowards, used ILM to manage their difficult director, e.g. they let ILM be the bad guy when Peter Hyams wanted changes. Ok, fine. The movie comes out and it does well, even if it is a silly story, and for years and years and years I heard Paramount complaining about how ILM had "reamed them a new asshole" for doing the work under those circumstances. I am sure ILM charged a premium, why not?
In other words, the studios are spoiled children who want it all for free, and don't want to invest their own money to have the capability in house. They want to be able to buy the service cheaply when they want it and not pay for the R&D or maintaining the infrastructure. And they are able to get away with this because they are, after all, the only game in town.