If you are a small business that has recently landed the United States Federal Government as a client, you are probably jumping for joy at the prospect of having a customer with such deep pockets. Yet securing this cash-rich entity as a key client does not necessarily mean a trouble-free account receivable process. As it is in life, even the best circumstances can have an unpleasant underbelly; for instance, consider the lottery winner who still has to pay taxes on his winnings.
Government Factoring Necessary for Many Small Businesses
Talk to any business owner that regularly serves the government and they are likely to mention that timely payment of bills can be problematic. In fact, this slow to pay issue is one of the key reasons businesses choose to use outside government contract funding. Factoring government receivables with a knowledgeable invoice factoring company is the best way a company can ensure they will get paid quickly.
Collecting payment from the government, which should take 45 days, can be slowed down for any number of reasons, some of which are similar those of the commercial sector, such as losing an invoice. How government contract financing differs in this regard is that mistakes are generally much easier to correct when dealing with a commercial entity. For instance, you call up the billing’s person and you explain the issue. They take a few moments to look in up in their computer, and generally the problem can be resolved in one or two 15-minute phone calls.
Skip the Bureaucracy and Use Government Contract Factoring
This scenario differs considerably when dealing with government financing and payment collection. Getting paid can be a long, arduous process involving lots of bureaucracy, many different hands and many more different computer systems. Trying to get someone to find the error and correct it can take a lot of work. So don’t assume that just because you have a whale of a client, this doesn’t mean that getting paid will always be easy.
Government factoring can help by providing you payment in less than 48 hours. This way, if you get paid late from your government client, you aren’t in a tight spot.