ClaimsAssignment (Assignment of Claims Act of 1940, as amended, (31 U.S.C. 3727, 41 U.S.C. 6305)
When a business is awarded a government contract, it must be prepared financially to fulfill the contract while waiting months for payment. Some companies will struggle to cover the upfront and ongoing expenses of a particular project and still fund other projects. Staffing expenses alone can run into the hundreds of thousands of dollars. A federal government contractor may find all of their resources tied up in a single – unpaid – government invoice. Fortunately, payment for government invoices may be received faster by assigning them to an authorized financial institution, lender or factor.

Government Invoice Factoring:
Government contractors can get upfront operational cash by Factoring their unpaid invoices. With this type of financing, a third party or “factor” purchases a contractor’s outstanding invoices for completed government jobs. The factor then advances the payment to the contractor, less a nominal fee. By factoring its’ invoices, a federal contractor will receive payment 30 to 90 days faster on average and the money can be used to fund current contracts.

Working Line of Credit and Business Term Loans:
Another funding option for established contractors with good credit and a successful track record is to gain pre-approval for a Working Line of Credit that can be utilized on an as-needed basis to fund general operational, staffing, equipment and sub-contractor costs in support of the federal contract.