Regardless of whether you are a small business or a large enterprise, a governmental contract is almost always a great opportunity to scale and grow your company. Providing services and goods to government companies and agencies is undoubtedly one of the preferred ways to take your business to the next level. This is due to the fact that governmental contracts are commonly rather large and they offer serious opportunities which are much needed for different business to strengthen and to grow their overall market share.
With that said, there are also quite a lot of challenges that you’d have to be aware of and be capable of overcoming. Governmental agencies can also dry up your capital and lower the cash flows for a serious period of time, especially if you are taking up on a larger scale project. This is mainly due to the fact that the project payment period is regulated by terms, setting a serious time frame. It’s oftentimes two or even three months before you get payment for the products or the services that you’ve already provided. And, as such, this could pose serious difficulties for different business to fund different growth opportunities which may arise and crop up as time goes by.
If your company has the current ability to offer those credit terms, this is an opportunity which could win you great contracts. However, it’s always a trade-off as you will have reduced working capitals as well.
Luckily enough, there is a financial mechanism that you can take advantage of in order to eliminate the risks associated with this trade off.
Government Contract Invoice Factoring
If you want to keep the supplementary cash-on-hand and at the same time keep on working on larger government projects, you might want to consider factoring government contracts.
This is a financial mechanism which is going to enable you to restore the steady string of cash flow without having to wait for two or three months for the government to actually pay up. Of course, this is associated with a range of different benefits, including but not limited to:
- Take on more projects
- Have control over the flow of cash
- Meet the ongoing expenses of doing your business
- Pay salaries on time without any delays
- Increase your overall liquidity in the business
- Fuel growth by not missing any business opportunities
- Strengthen your overall portfolio by working with the government
This all sounds quite attractive, doesn’t it? But what’s that mechanism and how does it work? Let’s have a look.
Factoring Government Contracts: In Detail
Now, this is a very interesting financial mechanism which allows you to pretty much sell your invoice from to the government as per your government contract to a third-party factoring company such as Carter Funding. Let’s walk through the process in order to make it easier to comprehend.
You are approached by the government with a request to handle a matter which falls within your expertise and you are offered $100,000 to do it. This is the amount of your contract. You weigh in the pros and the cons and you decide to take up the offer. However, governmental contracts have lengthy period time terms and you are usually going to get paid within 30 to 60 days after the job is done. This period might even be longer. So, you’ve invested a lot in order to get the job done but you have to wait for a substantial amount of time after you’ve issued the invoice to the government as per your contract.
This is where it becomes interesting. Third-party factoring companies step in to the picture to buy out that invoice. They are usually going to offer you a discounted price. So, for instance, a company will offer you $95,000 for that invoice. You get the cash immediately and you no longer have to worry about the cash flow issues, paying late fees to your suppliers, delayed salaries and all that. The third party factoring company will wait out the lengthy time period and get the difference as a compensation. You will lose a small amount but you will save a significant time period that you can use to put the already available cash to use and generate fulfill business opportunities. At the same time, you will still have the benefits of your enhanced portfolio for getting a governmental contract completed. That’s pretty much it and there are no catches associated with the process.
Lowering the Risks
Even though you are, indeed, working with the government, there are still slight risks associated with bankruptcy and defaults. When you sell your invoice to a third party factoring company this risk is transferred to them and you have nothing to worry about anymore.
Carter Funding Corporation is a brand that’s established and reliable. With over two decades of experience, the company manages to conveniently navigate the process of factoring government contracts in a confident and successful manner as they are capable of leveraging their deep and substantial knowledge in the governmental regulations. The company is well aware of the ins and outs associated with the additional processing requirements, payment practices and pretty much everything associated with the factoring process.
CFC is dedicated towards immediate provision of the necessary and much needed cash flow for companies which have successfully fulfilled government contracts but can’t afford the quarterly waiting period. This is something which brings back fresh liquidity on the spot without the extensive wait, allowing them to revitalize their business through serious cash flow, receivable in their bank accounts on the same day the deal is through. CFC will also carry the additional risks associated with the factoring process so your company doesn’t have to. This gives you the chance to go ahead and do what you do best – handle your own business and navigate it without the financial burden overlooking your shoulder. This is a luxury that you are capable of affording.