Factoring Government Receivables

The US Government continues to be the biggest spender in the world. That is good news for the twenty-five million small and medium sized business located in the United States. Government contracts can mean big money and a boon to smart entrepreneurs and business owners that grab these opportunities. So what’s the bad news? Getting paid by the US Government is not easy and can take a long time. There are mounds of paperwork, documentation must be in order and submitted correctly, not to mention the actual process of getting the checks cut. This can mean that a business owner can wait anywhere from fifty to one hundred twenty days to get paid. Many businesses cannot wait that long as they need to make payroll, replenish supplies, or purchase materials to fulfill the next order.

So what is a cash-strapped business to do? Well, the obvious comes to mind – get a bank loan, borrow money from friends and family, or even worse – give up equity in the company in exchange for some working capital. There is another solution. This is a solution that won’t create extra debt on your balance sheet nor require you to give up ownership in your company. It is called government invoice factoring.

Government factoring is quite simple. You continue to operate your business in the usual way with the exception of your invoicing. When you generate your invoice you provide a copy to a Factoring Company that specializes in government invoice factoring and they will provide you with the cash you need to operate your business now. No more checking the mailbox everyday hoping the big check arrives. Government Invoice Factoring companies can normally wire money directly into your bank account within 24 hours of receiving the invoice.

Not all factoring companies are created equally in this regard. Be sure to do a little research to be sure you are dealing with a company that is well versed in the funding of Federal contracts. The Federal Acquisitions Regulations are very complicated and the last thing you want is to have an inexperienced Factor muddy the waters and delay your payment. A simple internet search on “Factoring Government Invoices” should give you a good place to start. Ok, so this sounds great, but it must be really expensive. Not really. Consider the cost of missing a payroll or even worse, not meeting the deadlines and milestones on your government contract. The actual cost will normally be between 2 and 3 percent of the invoice amount, a small price to pay for complete peace of mind and the freedom to operate your business in the best mode possible.

If it is time for you to begin sleeping better and night – not worrying about when the next check will come, consider setting up a government receivable factoring line.

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Greg de Vries is with Business to Business Capital Corp. Please visit BTB Capital Corp to receive info for Government Invoice Factoring or contact them at info@btbcapital.com.