Factoring Government Invoices and Getting Paid In Days Rather Than Months

Factoring government invoices give businesses an opportunity to get paid in days rather than months. Landing a government contract, whether large or small, can be a big coup.

The government is generally a reputable customer with a good deal of money to spend. Because of this, it is reasonably easy to receive payment upfront for government jobs by selling the contract invoices (receivables) to a Factor. Factors will purchase the contract invoices of companies who have customers with good credit. Most government agencies will qualify.

One problem with alternative sources of financing (besides invoice factoring) is the long waiting period for a business can get money. For example, if a company wants to apply for a loan, they need to gather all of the necessary paperwork, fill out the loan applications and then wait for the bank’s decision.

The wait could take some a while. Meanwhile, the company has to come up with ways to continue to fund its operations and keep things going. If they need money right away, waiting could be disastrous. Invoice factoring can shorten this process a great deal. It is possible for businesses to receive cash by factoring their government invoices in a matter of days rather than the weeks or months it would take to apply for and secure a loan.

There are several disadvantages to taking out a loan to raise capital for a business, amongst them is time. There are times when a business needs money right away. They can’t wait. Things may have gotten so dire that without a quick infusion of cash, a company will have to close their doors. If they have a contract to provide services or products to the government, they have an opportunity to generate cash right away by selling them to a factor. When a factor purchases government invoices, they will pay for them upfront.

As a result, the company does not have to wait until after they complete the job before they get the payment. However, the company won’t get full value for the invoices. Instead, they are purchased at a discount, though they will get the remaining amount of the invoice eventually after the factors collect the payment, minus a fee charged by the Factor.

Government contracts, especially big ones, may require large amounts of capital. Even if the job isn’t a big one, if a business does not have cash on hand, it can be difficult for them to fund the operations; mainly because they will have to pay for personnel to complete the work as well as pay fixed expenses.

Waiting until the job is complete and the government’s payment, may not be an option many businesses can afford. Invoice factoring is a tremendous help. It is possible for businesses to have money in days to cover all of the expenses above allowing businesses to fulfill their contract and pay their bills. Fulfilling a client’s needs without taking out a loan.

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