Factoring for government invoices
Government factoring companies specialize in government contract factoring or factoring for government invoices. Because government agencies usually take awhile to pay their invoices, government factoring companies provide their factoring services to government contractors to alleviate the problem.
The factoring company advances you cash as soon as you bill your government agency. Factoring improves your cash flow because you don’t have to wait to collect your receivables. The upfront cash allows you to pay employees, sub-contractors and suppliers, as well as take on more projects.
Invoice factoring is often as good or better than a bank line of credit. You get working capital without incurring debt and you don’t have to spend a long time applying for a bank loan that might not get approved. Factoring companies can provide your business an adequate credit facility within one to two weeks. Once you’re account is set up, the factoring company typically funds your invoices within one to two days.
Government factoring companies may offer other types of government financing such as:
- Asset-based lending or accounts receivable financing
- Mobilization financing or unbilled revenue financing
- Purchase order financing
- Supplier payment financing or supplier guarantee
Some government factoring companies also provide financial commitment letters to show the government that your business has the financial resources to fulfill a government contract.