Factoring Government Invoices  

Estimated reading time: 4 minutes

Benefits of a government contract | Reality of the “cash flow crunch” | Solutions to cash flow issues | How does factoring work? | What are the fees?

Benefits of a government contract

Did you land that government contract? That’s a dream come true for some small businesses because it can lead to expansion and entering new markets.

With this government contract you’ll have…
  • Guaranteed work,
  • Confidence that your customer (the government entity) won’t default on payment of your invoice,
  • Assurance that you and your staff will work in safe, regulated environments,
  • And the advantage of having the contract renewed, which is essential to long-term business growth.

Reality of the “cash flow crunch”

You will discover that doing business with the government has its own set of challenges. Long invoice terms may means you could wait months to receive payment from that government entity.

That strain in between invoice payments is what we like to call “cash flow crunch” and it’s not pretty. If your cash flow becomes too strained between invoice payments, there can be serious consequences including:

  • Missed growth opportunities,
  • Delayed payroll,
  • Inability to fulfill orders,
  • And permenant loss of contract(s).

Solutions to cash flow issues

The best solution to solve “cash flow crunch” is to inject more liquid cash into your cash flow process. If you don’t have cash on hand, we recommend applying for financing. A bank loan can provide excellent terms from a quality source of capital. Unfortunately, it can take several months to receive these funds and not many businesses may qualify (even if they are performing well).

This is where factoring comes into play. We are owned by an FDIC-insured bank, this means you’ll recieve high quality service and resources paired with a strong stable source of capital.

Our experts understand the difficulties of government contracts and the intricacies of how election years, holidays, government shutdowns and even votes can delay payments. By factoring government receivables, your business will have fast access to the capital owed to you through those government invoices.

As a client of United Capital Funding, here’s how it works:
  1. First, you fulfill the agreed-upon service or order of goods laid out in your government contract.
  2. Then, generate an invoice for the total amount of the service provided and send copies to the government entity and United Capital Funding.
  3. Our experts will verify the invoice, then wire a large percentage (typically 80%) of the invoice amount to your account, holding the remaining percentage (20%) until the government entity pays the full invoice amount to our secure lockbox.
  4. Once the government entity pays the full invoice amount to our secure lockbox, our team wires the remaining percentage (less our fees) to your account.
  5. Voila! You’ve successfully injected liquid capital.

We will also ensure that all of the funded receivables will be in full compliance with regulations including applicable Federal Acquisition Regulations and the Assignment of Claims Act. In addition, our firm provides invoice management as a long-term full service solution. That means you’re not required to factor every month and you can access your invoices and reports through our secure online platform, all at no extra cost.

We are experts in dealing with all facets of government contract factoring, including…

  • working with your CO,
  • managing documentation requirements like Notice of Assignment and Assignment of Claim forms,
  • and turning invoices into the capital needed to grow a business.

We can do this even if you are a startup, an 8(a) contractor, or are a company with a recent history of a less-than-profitable performance.

What are the fees?

Our proposals are custom-priced on a case-by-case basis. To recieve a proposal, please click here to complete an application. Note that there is no cost to apply.

You will typically only encounter two types of fees – a fee for the cost of the capital and a banking fee (ACH or wire transfer charge). On average, our fees are lower than the industry average (according to Pepperdine Graziadio Business School’s 2019 Private Capital Markets Project). This keeps your total costs down and your invoice cycle efficient.

Please note, factoring is not a loan. It is an advance on pending payment by your customer, which means there is no repayment on your part.

Three Ways to Get Started

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“Nothing but great things to say about your customer service and help guiding my company throughout the process. Gives us confidence to go after more work opportunities and grow our business.”

Owner, Government Contractor, Virginia