Government Contracts Factoring Case Study: DOD Contractor
United Capital Funding was approached by a midsized ammunition manufacturer (ABC) based in Central Florida. The organization had a strong management team but the entity was thinly capitalized. ABC had recently upgraded and automated several of the manufacturing lines. During this process they purchased a great deal of equipment. Although the equipment was financed through bank financing, the capital expenditures hurt cash flow and limited ABC’s ability to finance their working capital through institutional channels.
ABC always had large accounts receivable balances due from the Federal government but they needed liquidity. United Capital Funding was able to structure a facility where they provided cash within 24 hours of an invoice being approved by the government. These advances enabled ABC to expand their operations and bid on additional government contracts. ABC was able to focus on manufacturing and sales. ABC no longer had to deal with the stress related to servicing payroll needs or keeping suppliers happy. ABC’s profitability increased over 500% during their relationship with United Capital Funding.
Government Contractors Financing Case Study: IT Staffing Company
An IT staffing company was having difficulty meeting its working capital demands. The company had traditional bank financing in place but they were constantly bumping up against the credit line maximum imposed by the bank. At the same time, the bank continued to impose stricter loan covenants. The bank’s strategy made it nearly impossible for the entity to expand. The company was doing business with various government agencies including HUD, U.S.P.S. and GSA.
The company evaluated a factoring strategy to replace the traditional financing. In five days United Capital Funding paid off the bank and freed up more than $500,000 for the company. This approach provided the company with the ability to procure new government contracts without having to be concerned that they may not have enough capital to meet the payroll requirements.
Invoice Factoring of Government Contracts Case Study: Public Relations Company serving various government agencies
The upfront demands for working capital in the marketing/PR space require businesses in that arena to have a very large amount of working capital. Various media outlets require payment up front for advertising. In many cases, the businesses have minimal fixed assets and have difficulty procuring credit. United Capital Funding was able to leverage amounts due from various government agencies including the Center of Disease Control and Prevention and the Centers for Medicare and Medicaid Services to provide the company with the working capital it needed to meet the demands of the media outlets.
Companies that benefit from factoring of government receivables may be contractors for federal, state or county contracts. In many cases, MWOB (Minority and Women Owned Businesses) and SBA 8(a) organizations are eligible to factor government receivables.
When working with the Federal Government, any receivables funding must follow the guidelines set forth in the Assignment of Claims Act and the processes set forth in the Federal Acquisition Regulations. United Capital Funding is an expert in these processes.