Government Contract Factoring

Secure Cash After Landing a Government Contract 

As a business owner, obtaining a government contract is a great opportunity that will guarantee pay, even in the event of a government shutdown. Although you will be assured to receive funds, you may need to wait over 60 days for money to come in. This can lead to draining your working capital in the process. Government contract factoring can be the answer to closing the cash flow gap. With receivables factoring, business owners get paid upfront to ensure they have the necessary funds to cover expenses, such as payroll and operational costs. Government contract factoring allows you to receive payment on your invoices within hours after submitting them to a factoring company. No matter if you are a contractor at the municipal level or the federal government, as long as the invoice has been accepted by the government for a delivered product or completed service, government contract factoring can work for you.   

How Government Contact Factoring Works 

Government contract factoring is a simple process. In this debt-free alternative funding method, you sell your government invoices to a factoring company in exchange for cash now. The first step is to find the right government contract factoring company for your business. This is where Factor Finders steps in. We will learn about your company’s needs and then use our industry expertise to match you with the best factoring company for your needs. You will then complete a straightforward application process. Once the government contract factoring company verifies the invoice, you will receive a cash advance the same day. Unlike a traditional bank loan, the money is debt-free. Cash advances can be between 80-90%. The remainder of the funds are held in a reserve account. After the government contract factoring company has received payment from the government agency, the factor releases the reserve portion back to the contractor. There is a small fee for the receivables factoring service.

Requirements for Government Contract Factoring

Wondering if your business is eligible for accounts receivable factoring? Contracts for federal, state, local and municipal projects are all eligible for factoring government receivables. Some industries that are eligible for receivables factoring include IT and computer services, logistics and transportation, military products and supply, communication systems, distributors and manufacturers, engineering, temporary staffing, medical services and construction. Age of the business or credit history are not deciding aspects with invoice factoring. To qualify for government contract factoring, the invoice must have been accepted by the government agency for the delivered product or completed service and the accounts receivable owned by the company must be unpledged.