The U.S. government has a number of federal agencies / companies which use contractors to provide different kinds of services and goods. It provides several companies and organizations particularly small businesses the opportunity to bid on these contracts and work for the federal government. Many businesses consider these contracts to be very profitable because the government is likely to pay for any contract it enters into.
Awarding US government contracts can be extremely competitive since several companies would like the opportunity to work with the US government. Business owners eagerly pursue these contracts, seeing them as guaranteed income. Those companies seeking government contracts must identify which government agencies require their services. Finding out when these positions are available and knowing how to successfully land them is critical to your company’s success.
While there are many significant benefits to fulfilling contracts, there are also drawbacks, especially for small businesses that do not have much capital. However, Small Business Simplified Acquisition Procedures are a contracting method mainly designed to reduce the amount of work required for governments to evaluate bids and award them to small size businesses. The purpose of these procedures is to reduce administrative costs and increase the chance that small and medium-sized enterprises receive a fair share of government contracts. The government contracts tend to be very large and can be expensive to finance. Operating costs can be very high. For example, let’s say you have a $1 million project available that will cost $700,000 in financing. If a company invests all its resources in government contracts, it may be left with only a few dollars to cover current expenses and fund future work and projects.
Some of these businesses don’t realize that they have a way to raise the money they need to continue operating until they actually get paid by the government. This can be done through invoice factoring. With invoice factoring for government contracts, a business receives an advance payment for the amount that the government owes from the factor. By selling your receivables at a discount, you can receive your money immediately without having to wait to collect it yourself. In return, Factor can make a profit on its invoices by charging the company a discounted price for its services. This allows businesses to quickly access the funds they need without delaying their day-to-day operations.
There are factoring companies that specialize in government contracts. These factors include funding government contracts, which tend to be much larger accounts than the average account, and therefore tend to be larger and more established. Businesses looking to sell invoices should look for a factoring company that specializes in this industry. They must have the resources and expertise to effectively negotiate with the federal government.