Being awarded a government contract to provide either services or product is a big step for any company. However, it is not without its own set of potential problems. One of the most pressing concerns for most companies is the need for government contract financing because of the inherent delay in invoicing and payment.
Today, thanks to the benefit of electronic fund transfers, payment for goods and services provided for a government contract is typically 30 days. While this is faster than in the past, it still leaves a small to large business with a month’s delay in receiving payment.
Uses for Funding
Using a company offering government contract financing dramatically reduces the gap between invoicing and payment. For most businesses the factoring company will have payment ready on the invoice within days. With this funding the business can replace inventory, purchase needed equipment or pay current employees. It can also be used to hire new employees or contracted 1099 workers.
It can also be used to make payment for the large upfront costs incurred with many government contracts. Without this funding, a small business may have to utilize their line of credit or apply for a loan, both which can have significant financial consequences and require time to get into place.
Easy Process
Companies offering factoring should be able to approve your business application for factoring for Federal, State, Local and Municipal government contracts. Not all factors work with all types of government agencies, but top companies will offer comprehensive services.
To obtain government contract financing the business will need to complete a short online application. The application should be free from fees or obligation, and will clearly outline the services offered by the factoring company.
Approval is often possible within 24 hours of submitting an application and invoicing documentation. The funding arrives into the designated account within a few days, allowing you to access the cash you need to grow your business and complete day to day operations.
With government contract financing it is possible to prevent the short-term cash flow issues common with large government contracts. It is also highly beneficial for any small business as it avoids using credit, business lines of credit or requiring the need to apply for operating loans on a regular or infrequent basis.
At United Capital, we can provide government contract financing for invoices of $20,000 and above. To learn more about our factoring service contact us.
