Providing staffing for government agencies and entities can be a very lucrative contract to have, but it does create unique challenges. Often government contracts have extended terms, and there can often be disruptions, delays and other issues that can prevent timely payment of contracts.
While waiting for government contracts to pay, staffing companies can and do experience cash flow issues. This means difficulty in making payroll, in hiring new employees, and perhaps in retaining top professionals.
This issue can be corrected through government staffing factoring, which is a very common and highly effective option for short-term cash flow issues. This allows a company, called a factor, to provide cash based on the amount of your outstanding invoices to the government agency.
The first step in getting started with government staffing factoring is to submit a simple application to a factoringcompany. You will also provide copies of the invoices with time sheets, you wish the factor to consider, and the Factor will verify that the work has been completed with the government agency.
Upon this verification, the factor will advance up to 90% of the total value of the accounts receivable into your business account. This can be completed within a few days. Once the government agency pays the invoice according to the terms, the factor deducts their fees and transfers the remainder the staffing company.
The Reasons behind Factoring
While the ease of the process is important for many staffing companies with government contracts, there are other benefits or reasons this is such a popular option to traditional bank loans. These include:
- No interest or principal to repay since it is not a loan. The business can spend the funds from the factor as they see fit without having to budget to start making payments.
- The factoring service considers the credit worthiness of your customer
- Increased funding possibilities. You have the option to factor as many or as few of your accounts receivables, giving you full control over the process.
Finally, all credit and background verifications, including any costs and fees for those services, are provided as part of the government staffing factoring services. This helps your company not only save money but have the funds on hand to keep growing.
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