Working as a government contractor can be a two-faced coin, with the potential to bring both fortune and frustration. As a government contractor, you know that federal, state, and local government agencies are major clients, offering plenty of opportunities for stable, long-term revenue. However, on the flip side, you will also need a carefully crafted strategy to overcome the cash flow challenges you could face by accepting a government contract.
Whether your contract is for manufacturing or providing a service, you know that you won’t be paid until the job is complete. Yet, you still have overheads and supplies to pay for, as well as higher wages for contractors and workers. Unfortunately, government agencies are known to take at least two to three months to pay their invoices due to all their internal approval processes. You can’t be too pushy in following up on payment, nor can you expect an advance or downpayment before you start the work – these contracts are highly competitive, and the agency could easily choose from any number of other contractors.
So, how do you balance keeping the government contract provider happy while still having enough cash flow to keep your business running? Government contractor factoring.