Government Invoice Factoring: Fast, Reliable Funding for Government Contractors
It’s been said that the ship of state turns slowly, and no one understands that metaphor quite like government contractors. Private companies that perform work for federal, state and local governments know that payments are not always distributed on a timetable that’s convenient for them. This can have significant cascading consequences, as these contractors may find themselves in a bind while they wait for their invoices to be approved and paid. Without liquid cash flow, they may be unable to make the investments they need to keep up with the rest of the marketplace — or even pay their own bills in a timely fashion.
Fortunately, there is a solution that provides contractors with the fast access to cash they need without having to wait the weeks or even months it can take for their payments from government entities to arrive. With government invoice factoring through Porter Capital, companies can receive funding faster, without adding new debt, and with greater flexibility than traditional business loans or lines of credit. With invoice factoring, unpaid invoices can be converted immediately into cash that can be reinvested into the company or used to cover operating costs.
If you want to learn more about how factoring for government contractors can help your company improve its financial standing and optimize your strategy for dealing with government contracts, get in touch with the experts at Porter Capital today.
How Government Invoice Factoring Works
Working with Porter Capital means the invoice factoring process will be smooth and easy. All you need to do is submit any unpaid invoices from your government contracts. Our team will work to verify the eligibility of those invoices based on the type of invoice, the agency’s payment history and the size of the amount owed. We also take into consideration the creditworthiness of the agency that owes you payment, as this can influence the rates and fees associated with the factoring process.
Once we determine that your unpaid invoices are eligible for government contract factoring, we will advance you between 80 and 95% of the invoice’s value. You will receive these funds within 24 to 48 hours of our receipt of the invoices, giving you quick access to a significant portion of what you’re owed. While you plan how to spend your new cash flow, our team works with the agency to secure payment of the invoices factored. All of this is enabled by the Federal Assignment of Claims Act, also known as the Assignment Act. This legislation, enacted during World War II, gives government contractors the right to assign their rights to payment to a third party who assumes responsibility for collecting payment.
After the government agency pays the invoices, we will release the remaining balance to you minus any associated fees. Choosing to work with us means you will experience transparent pricing structures with no hidden charges or unexpected fees. We tell you up front what you can expect to pay so you can budget with confidence.
Why Government Invoice Factoring is Different from Other Funding Options
Working on government contracts can be lucrative for any business, but the slow pacing of payments often means contractors have to find alternative sources of funding in the meantime. However, the traditional methods of obtaining immediate cash flow come with some significant caveats that can have a negative impact on your operations. Here’s how government contract financing compares to some of the most common ways businesses seek to secure their funding:
- Traditional Bank Loans: Many businesses turn to bank loans as their first option for financing. However, this path often presents challenges, including long approval timelines and strict credit requirements that can make it difficult for some companies to qualify. You also will be on the hook to pay back the loan over time with interest, meaning your company adds to its existing long-term debt. Factoring government contracts, on the other hand, doesn’t require you to have a strong credit history. You also won’t be adding debt and once you’ve paid your factoring fees, your obligation is complete.
- Lines of Credit: Establishing a line of credit is another popular choice among government contractors, but it too comes with some serious limitations. As with traditional loans, you’ll be locked into paying interest that can hinder your ability to make decisions in the future. There also are limitations on how much credit you can secure and when you can receive it. With factoring, however, you don’t have to worry about making interest payments on your funds. You’ll also have the flexibility to choose as many invoices to factor as suits your needs, meaning you’ll have more latitude in your ability to make choices regarding your company’s direction.
- Waiting for Payment: Many contractors choose to simply wait for their invoices to be paid by government agencies, believing it to be the simplest and most dependable option. This means they can end up waiting for months to receive funding, resulting in gaps in their cash flow that can hobble their ability to cover operating costs and more. By choosing to factor your invoices, you can avoid these problems and get the immediate cash you need without waiting for government payment schedules to catch up to your needs.
Legal and Compliance Considerations in Government Invoice Factoring
As would be expected when dealing with government contracts, there is a wide range of legal and compliance considerations to contend with when factoring these invoices. In addition to eligibility under the Assignment of Claims Act, there also are concerns pertaining to how contracts may be impacted by the Federal Acquisition Regulation as well as state and local regulations depending on the agencies you serve.
One of the primary benefits of working with Porter Capital for factoring your government invoices is our comprehensive experience with these types of contracts. Our team understands the ins and outs of government factoring, ensuring you receive knowledgeable and reliable financial support. When you work with our team, you can rest assured that we will make the entire process as smooth and worry-free as possible. You won’t have to worry about unexpected obstacles getting between you and the money you’re owed. Our knowledgeable experts deliver the expertise needed to keep everything on track, so you won’t experience any undue delays in getting your money.
No Concentration Limits: A Competitive Advantage in Government Invoice Factoring
Many factoring companies that service government invoices restrict their clients by imposing concentration limits. This means they have strict limits on how many invoices from a single government agency they are willing to factor. Because so many government contracts involve long-term arrangements with one agency, this can put a serious restriction on how companies can benefit from invoice factoring.
At Porter Capital, we don’t impose concentration limits. We can process as many eligible invoices as you want from a single agency. This means you have the freedom and flexibility to gain quick access to the funding you need when you need it, with no artificial restrictions on the process. We’re committed to helping you maintain a steady cash flow so you can concentrate on building your business.
How to Choose the Right Government Invoice Factoring Partner
Selecting the right factoring company to help you with your government invoices is critical for your long-term success. When shopping around for a factoring partner, it’s important to look for a few features:
- Government Experience: Does the company have specific experience dealing with government invoices? Without the right knowledge, you could run into trouble getting your cash in a timely fashion.
- Transparent Fee Structure: If the company you work with doesn’t spell out all the terms of the contract up front and in an honest manner, there’s a good chance you may be blindsided by unexpected fees or surcharges. Knowing what to expect when you enter into an agreement with a government factoring company provides peace of mind as well as more stability when budgeting for the immediate future.
- Fast Payouts: The entire purpose of factoring is gaining quick access to the money you’re owed by a government agency. If your factoring company makes you wait more than a few days to receive your payments, it defeats the purpose and leaves you in the lurch without the funds your business needs.
- No Restrictions: Factoring partners that impose concentration limits and other restrictions on how many invoices you can factor through them put you in a bad situation. You want to be sure the company you choose will give you the flexibility you need to address your financial needs in the most effective manner.
Taking all this into consideration, it’s easy to see what makes Porter Capital stand out from the rest of the industry. We’re dedicated to providing quick payouts without restrictions or hidden fees. Our extensive expertise when it comes to government contracts means you can have peace of mind, as well.
Why Government Invoice Factoring is the Best Solution for Contractors
Government contracts are highly sought-after because of the stability and value they offer, but their payment schedules often leave contractors waiting around for their cash flow to improve. This is what makes invoice factoring such an attractive proposition. With the right factoring partner, contractors like you can stop worrying about when they will be paid and get the money they need as soon as possible.
With improved cash flow provided through invoice factoring with Porter Capital, your business can gain reliable revenue to keep your operations running smoothly and fuel future growth. Whether you need to invest in expansion or simply stay on top of your operating costs, factoring through Porter Capital provides you with the resources you need. To learn more about what we can do for you and receive a quote, reach out to speak with one of our representatives today.