Government contracts provide steady, reliable, and profitable work to contractors. These contracts can last anywhere from a few months or a few years. Working with the government is potentially a huge opportunity for stable business growth. As a contractor, obtaining one government contract means you can easily acquire more. Turning down opportunities because of financing challenges can considerably slow down your growth. Steady working capital gives you the ability to bid on new projects confidently.
Government contractors face similar issues that other business owners face, including stagnant cash flow stuck in your accounts receivables. Suppose you can't afford to wait weeks or months for payment. In that case, you may want to turn to government contract factoring before experiencing any cash flow shortages that could potentially disrupt the contract.
Government contract factoring makes it possible for small- and medium-sized businesses to fulfill contracts from the government. You'll receive a cash advance based on the invoice value of your contract with a government agency. This financial solution will help bridge the cash flow gaps between completing the work and receiving payment from the government.
Advantages of Government Contract Factoring With 1st Commercial Credit
Whether you have a labor-hour contract or a fixed-price contract, you can factor in those invoices. It's a flexible funding solution that can be used as needed. Factoring provides a consistent base of working capital to make investments or pay employees and vendors. You can receive up to 80% or 97% of the invoice quickly after applying and submitting your invoice.
Instead of waiting for approval from a traditional form of financing, you can resolve cash flow issues with factoring now if you have outstanding invoices. In addition, if you have a business with a low credit score, you may not be eligible for a bank loan or line of credit but can still qualify for government contractor factoring with us.
Which Businesses Can Benefit From Government Contract Factoring?
Factoring works for a variety of different projects and industries. Here's a sample of the types of industries that use invoice factoring to help fund their businesses:
When considering invoice factoring as a government contract funding solution, you need to make sure to satisfy the following:
Invoice financing allows you to offer competitive payment terms of 30, 60, or 90 days without a problem while avoiding cash flow issues. However, the most crucial benefit is the flexibility to adapt to your business needs and goals. A third advantage is that the line of credit can increase along with your sales. Qualifying for manufacturing financing is much easier than qualifying for a line of credit or bank business loan. The quality of your customers' credit is critical because the factor uses your receivables as collateral. Also, your company should not be involved in any serious tax problems or any legal disputes. Because of these requirements, many startups, small and mid-sized manufacturing companies can qualify for this solution. Invoice financing is an ideal alternative for companies with cash flow problems needing immediate funding.
Accounts receivable financing is an alternative method of financing that provides fast working capital to start-up staffing agencies. It uses a company's accounts receivable as a basis for financing, giving a quick and predictable cash flow. These factoring services help business owners smooth out cash flow gaps, enabling them to focus on other crucial aspects of the business without being weighed down by continual short-term funding constraints.
Many common challenges for companies are usually amplified for start-ups. Each year, brave entrepreneurs put their efforts and personal resources into starting a business of their own. They create business plans and work tirelessly to come up with the funding they need. In most cases, they realize that they will probably have to come up with the funds on their own.
The staffing industry is a tough one for start-ups to be in. When setting up a staffing company, there are many things to consider that can require years of planning to get the company off the ground. In the end, you will find that if you don't have the funds, your plans for opening your staffing business get paused or completely halted. On top of this, the staffing industry is well-known for being extremely competitive.
Funds are fundamental to running a successful staffing agency because of many reasons, including:
1st Commercial Credit is not a bank, so we do not ask to see your company's credit profile to approve your application. We offer flexible funding services you need to turn your outstanding invoices to creditworthy clients into cash. We utilize your clients' credit scores to approve your invoices, and that is how we can give you a business line of credit.
How Does AR Financing Work?
Step 1: Account Set Up. The first step is setting up the account so the factoring company can go over your company's receivables aging report, taxes, lien information, as well as your clients' credit profiles.
Step 2: Select the Receivables To Factor. The next step would be selecting which invoices to factor in. Once this is decided, the customer invoices are submitted.
Step 3: The Verification Process. After the goods or services are delivered to the customer, 1stCC will then verify them. This process ensures that all invoice amounts are correct and due within the established time.
Step 4: Receive The Funds. After the verification process is completed, the funds would be calculated by 1stCC and deposited into the company's bank account—in some cases, within 24 hours.
Step 5: Final Step. The transaction is finished once the funds are received and everything is paid off.
Business owners should do extensive research to determine which form of financing is the best fit for their business. Even if some well-established companies may still qualify for more traditional forms of lending, many start-ups and entrepreneurs may find factoring to be a better fit. Utilizing your accounts receivable with an invoice factoring company is a practical, cost-efficient method of small business financing for any B2B company. It allows business owners to focus on their primary objectives and maintain consistent cash flow while getting more out of their accounts receivable. As a payroll funding company for staffing agencies, we strive to provide the best customer service, prompt solutions, and a reliable funding source for our clients.
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Some of the key sectors in Indianapolis include:
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