Government Contract Financing
As a small business owner, you know that a contract with the government could represent a huge opportunity to grow your business and become more successful. But, you’re also aware of the issues that come with the opportunity: big government contracts use up all your operating capital, can pay 60 or 90 days later, and cash flow is short in weekly payroll and fixed overhead… so you’re forced to pass up new contracts and opportunities. But it doesn’t have to be that way: government invoice factoring, receivable financing, and purchase order financing can help your business succeed.
What is the Financial Capability Certification Program?
This program provides customers with contingent financing commitments so that they can demonstrate to U.S. Government contracting officers that they possess the financial wherewithal to execute on contract awards. This results in our customers winning more and larger, contract awards. This website has been created for the purpose of giving you the government contractor and bid winner, a thorough understanding of what government contract financing is, and how it can help your business succeed.
WHAT IS GOVERNMENT CONTRACT FINANCING?
Government contract financing can be a very effective way for companies to fund the operational costs associated with doing business with the Federal government. Every year, the U.S. government awards billions of dollars of contracts to private businesses throughout the United States.
They are available for both small and large businesses.
While it can be a great feeling to be awarded a government contract, it can also be quite expensive to complete assigned jobs. Some companies will struggle to cover operational costs of a particular project and still fund other projects and jobs.
Working capital problems can occur which can paralyze the company. There may not be enough to pay personnel and also cover expenses. One way for a company to get the cash that they need is to sell their government contract invoices to a factoring company.
After a company has finished a government contract job, they will prepare and send an invoice. The government may not pay right away. In fact, it could take 1-2 months before they send payment. In the meantime, the company will be out of the money that went towards operational expenses to complete the job. Without any income directly from this job, the company could be cash poor. For a large company with a good deal of income, this may be a bit inconvenient but it won’t put their company at risk or cause them to be unable to fulfill other commitments or jobs.