There are many companies in all areas of the United States that do business with their local government. They may supply equipment, provide staffing, complete service work, or any combination of the above. When this is the case, and the business needs operating capital, using a local government invoice factoring company is a good financial option.
The biggest issue for most companies doing business with a local government is that some of the less experienced factoring companies don’t work with government contracts. However, there are top local government invoice factoring companies out there, a few which have decades of experience in working with government contracts.
The Funding Gap
It is common practice for any federal or local government contract to have a 30 or 60-day gap between invoicing and payment. For the company this means that they have to front the cost of paying for materials, supplies, and equipment, pay staff, hire new staff or add to their inventory and then still wait one or two months for payment.
This often leaves the business completely depleted of funding to take on additional contracts or to pay their own invoices and meet financial obligations. While the payment is coming from the government, it simply won’t arrive in time to address immediate funding needs.
The Funding Solution
With local government invoice factoring the factoring company buys the open invoices that are pending payment. The contractor can choose to sell some or all of the account receivables, and the factoring company then funds.
The company providing local government invoice factoring then works with you to collect from the government, reducing the need for the business to continue to deal with this often time-consuming issue. When the invoice is paid in full, the factoring company retains their agreed upon rate for the service and sends the contractor any residual amount.
The benefits to the contractor and his or her company are obvious. There is no waiting for payment, no need to worry about collections, and the ability to know just how much you have on hand for payroll, paying invoices, or even taking on new contracts and expanding the business.
Finding a partner in a local government invoice factoring company is an ideal solution for any business with government contracts. Working with a factoring company with services to help you to grow and expand will be important for your business both immediately as well as in the future.
