Don't Let Cash Flow Problems Stop You from Taking a Government Contract

For most companies, receiving a large government contract is a Catch-22.  On one side, getting a contract normally guarantees a large payment.  Unfortunately, before this payment can be received, you usually have to wait one to two months after you have completed the job or project.  Because government projects are typically large tasks, they require a large amount of operating capital to complete.  Because payment is not instantly received upon completion, a company can be stuck with virtually no cash flow for up to two months.  Since having a strong cash flow is the key to success for almost every company, not really having one is a major problem.

If you are tired of finding your company in the situation outlined above, it is time to take advantage of a relatively new financing option that will eliminate your cash flow problems.  The process is called factoring, and it is specifically designed to ensure that companies have the cash flow they need to continue operating properly.  Normally, once you complete a government contract, you issue an invoice and wait for your payment.  With factoring, you actually sell the invoice to the factor for seventy to ninety-five percent of your value.  This allows you to access the revenue you have earned in less than one day and maintain the cash flow you need.  When the government pays their invoice, you will receive the remaining balance from the factor (minus a small service fee).

Regardless of whether your company specializes in logistics, computer systems maintenance, distribution or any other industry that receives government contracts, if you are tired of passing up government contracts because of cash flow problems (or simply having trouble maintaining your operations because contracts are depleting your cash flow), you need to take advantage of the benefits that factoring has to offer your company.