WHAT'S IN THIS GUIDE
Winning government projects and contracts is a killer way to grow your company. But as a small business, you can’t afford to wait for payment on your gov. contracts. As your partner, FundThrough automates the government invoice factoring process, so you have the working capital to pay your bills and fund all other operational costs without discounting invoices or taking a loss on your receivables. Factoring is a steady, long term solution for a variety of industries that serve government clients.
If you supply goods or services to the government, payment on your invoices can take months. Your business may not have the time or liquid assets to wait.
Government Contract Factoring allows you to get an advance on your unpaid local or federal gov. receivables.
A type of accounts receivable financing, factoring invoices for small businesses can be especially helpful if you depend on cash flow to grow your business or you can’t qualify for a loan or line of credit.
Invoice factoring works differently for government contracts that with other industries in that the Federal Acquisition Regulations (FAR) determines contract payment terms.1 But how fast you receive payment depends on several factors—the govt agency, the size of your company and the contract, the urgency, and other criteria.
Factoring government contracts involves selling your gov. invoices to a factoring company. By learning about your company and using our industry knowledge and expertise, FundThrough extends an advance on your invoices, minus a factoring fee, once you have fulfilled your contract.
You get cash-in-bank and selected receivables removed from your balance sheet.
Run Veggie partnered with FundThrough to accelerate its cash flow, making it possible for Run Veggie to prepare 10,600 meals for the Washington D.C. police force that provided security for U.S. President Joe Biden’s Inauguration.
Government invoice factoring is different from factoring in other industries because it can be more challenging to secure gov. contracts, and payment on receivables is often delayed. That makes finding the best factoring company no small task.
Not all invoice factoring companies take on the government. They may also differ in fee structures, specialties, programs, and contract terms, or they have a complicated approval process. Some have generous contact terms and flexibility, but charge extra fees. What may seem like a great deal at first might fall short over time.
Fortunately, when your small business is growing fast, but cash flow is tight, FundThrough offers the best factoring solution to fit your funding needs.
Qualifying for gov. receivables factoring doesn’t rely on your credit score. It doesn’t matter if you are a small business just starting up or if you’ve been in business for years. But you must qualify in other ways.
Your questions answered.
If your business relies on working capital, invoice financing (or accounts receivable financing) allows a portion of your outstanding invoices (usually 80% to 90%) paid from a loan or line of credit.
Invoice factoring leverages a factoring company’s expertise that advances you a percentage of your total outstanding invoices upfront and then collects the full amount from the gov. agency on your behalf.
Technically factoring is not a loan. It is the purchase of future receivables.