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Invoice Factoring for Government Contractors
The government provides many essential services for the public, and they frequently contract those services out to private businesses. However, many of these businesses have found that getting the government to pay invoices can be a hassle. Agencies will frequently wait until the last minute to pay an invoice, leaving government contractors in a lurch. This can prevent you from bidding on new projects, and limit the resources you have available to grow your business. There is a solution to these issues, however, and that can be found in invoice factoring.
What is Invoice Factoring for Government Contractors?
Invoice factoring is a common business strategy for getting liquid capital quickly so it’s there when your business needs it. A factoring company will buy your receivables, and pay you an initial funding rate that is usually from 80-95% of the value of the invoice. You’ll get the rest when the invoice is paid, minus a small discount fee. Many invoice factoring companies provide funding within 24 hours, dramatically increasing the speed with which your business can grow.
Benefits of Invoice Factoring for Government Contractors
There are a number of benefits when it comes to invoice factoring for government contractors. The first is that you get capital on hand when you need it to grow your business. You can use your money to hire new labor, buy equipment, expand your offices, or anything else that you need to do to grow your business. There are no restrictions on how you can use the money you get from factoring.
Another benefit of invoice factoring for government contractors is that factoring companies evaluate the creditworthiness of your customers. As a government contractor, you can be confident that the invoices will get paid, which means that you can get factoring services even if your business hasn’t been open long enough to establish a credit history, or if your company has had credit difficulties in the past.
Finally, invoice factoring isn’t debt. This keeps the books clean and prevents tax and accounting complications and headaches that can come from loans and business lines of credit. The result is that you can spend more time growing your business and enhancing your core operations and less time worrying about what the ledger looks like.
As you can see, there are a number of benefits that government contractors can receive from invoice factoring. If your business invoices the government and is facing a cash crunch, consider invoice factoring now!
