The Challenges Avoided With Government Contracting Factoring Services

As a business owner landing a contract with a local, state or federal government agency is a big opportunity for any company large or small. Sometimes, because of the way that these government contracts are created, a business may want to consider turning to government contracting factoring services as part of their plans to take on this new opportunity.

While there is a very big upside to landing a government contract, there are also a few challenges as well. This starts right from the first day you offer the services or the product, as you will typically provide the invoice for all that month’s work or product on the last business day of the month, and then won’t get paid on that invoice for thirty or sixty days.

With government contracting factoring services that gap in time, and that thirty days to process your invoice and generate payment, becomes very important. This is because the factor will fund up to 80% of that invocie within a few days of the invoice being submitted, providing you with the operating capital you need to continue to fulfill the contract requirements and even take on new business.

Reputation of the Government Entity

If you are trying to find a business loan, a short term loan or a line of credit from a traditional financial institute such as a bank, they don’t allow you to count pending payment on invoices as income.

For this reason, banks look at your current business financial statements, profit and loss statement and your overall credit score. For some types of businesses, they may even require a personal guarantee from the business owner, tying up personal assets in the business loan.

With government contracting factoring services the importance of the creditworthiness of the buyers, the government agency, is what is important. Since the government is a reliable entity to do business with, government contracting factoring services are much easier to be approved for than traditional bank and business loans. They also require no business credit check for the seller’s business and no personal guarantee.

No Concerns about Delays

Once the business receives their funding from the government contracting factoring services they have the cash on hand to spend as needed for the business to continue to grow, take on new contracts, and to fulfill their contract obligations.

Delays in payment by the government such as votes that are delayed, holidays, internal issues and other factors won’t affect your business. Instead, the government contracting factoring services will manage the accounts on your behalf, and then deduct their fees and forward the residual amount to your business account when the invoices get paid without any additional work by your staff.

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