For many government contractors, there are two key times when they start to worry about how they are going to get the working capital needed to support their contract:

1)   Once the celebration concludes from winning the latest government contract.
2)   When you are getting ready to bid on the next big government contract.

The good news is with key partnerships and flexible options you will never have to worry about your working capital again. 

When establishing key relationships, it is imperative that you factor in how different the environment is when dealing with a government contract. It is important to find partners who are experienced and knowledgeable in government regulations, compliance regulations and the rigors of government contracting. Additionally, it’s invaluable to find partners who understand the culture, payment practices, unique terms, and language as well as the additional processing required for government contracting.  

Another key consideration for a working capital solution is what type of financing will best fit your needs. There are several common options and some you may know less about. Here are three to consider that provide the working capital many government contractors need:

Asset Based Line of Credit

An Asset Based line of Credit allows you to leverage your company’s assets to increase your working capital by using your accounts receivables from your government contracts and inventory assets to borrow against. 

Government contractors with a proven business model and the ability to effectively manage and report often find an Asset Based Line of Credit to be a good solution to their working capital challenges.

Accounts Receivable Factoring Line

An Accounts Receivable Factoring Line can eliminate the 30-90+ day wait for payment of your invoices. With Factoring, you immediately increase your cash flow by selling your accounts receivable once you have submitted it to your client. 

Government contractors who are rapidly growing, have a short operating history or have constrained access to capital often find Accounts Receivable Factoring Lines to be a good solution to their working capital challenges.

Earned / Unbilled Accounts Receivable

With Earned but Unbilled Accounts Receivable financing you are able to increase your cash flow when you need it as opposed to being restricted by government contract terms that only allow you to bill monthly. It is a flexible financing option that refers to revenue related to services provided but not yet billed or invoiced due to the terms of the contract.

Government contracts that include time and materials can benefit from Earned but Unbilled Accounts Receivable financing when you need a bridge to fund payroll when the government contracts restrict the invoicing frequency. 

When you need to manage your working capital in order to bid on or maintain a government contract, looking at alternative options can be the best solution. With the right partner who truly understands the needs associated with a government contract and the right solution designed specifically for government contractors you will find you no longer need to worry about your cash flow.