Government factoring allows contractors who work with federal, state, and local government agencies to get paid immediately instead of waiting through lengthy government payment cycles. While government contracts offer stability, the payment terms can be brutal - 60, 90, or even 120 days is common.
The Government Payment Challenge
Government contracts are attractive: stable revenue, creditworthy customers, and often long-term relationships. But the payment cycles can crush a business's cash flow:
- Federal agencies average 30-60 days but can take longer
- State agencies vary widely - some take 90+ days
- Municipal contracts often have budget-dependent payment delays
- Progress billing adds complexity to the payment timeline
- Contract modifications can delay payments further
How Government Factoring Works
Government factoring follows the same basic process as regular factoring, with some additional requirements for federal contracts:
- 1You perform work under a government contract and submit invoices
- 2You submit those invoices to a factoring company
- 3For federal contracts, an Assignment of Claims is filed
- 4You receive 80-90% of the invoice value (government advances are typically slightly lower)
- 5The government agency pays the factoring company directly
- 6You receive the remainder minus factoring fees
Stop waiting on government payments
Check your eligibility for government factoring.
Assignment of Claims Act
For federal contracts over $1,000, the Assignment of Claims Act governs how contractors can assign payment rights. This requires specific documentation filed with the contracting agency. An experienced government factoring company like Factoring Express handles this paperwork for you.
Government Factoring Rates
Government factoring rates typically range from 2-5%. While government agencies are extremely creditworthy (they always pay eventually), the longer payment cycles mean slightly higher rates than standard commercial factoring.
Types of Government Contracts We Factor
- Federal prime contracts and subcontracts
- GSA Schedule contracts
- State and municipal contracts
- Defense contracts (DoD)
- Service contracts (janitorial, security, IT)
- Construction and infrastructure projects
Requirements for Government Factoring
- Active government contract with approved invoices
- SAM.gov registration (for federal contracts)
- No current debarment or suspension
- Invoice for completed work (not progress billing in most cases)
- Ability to file Assignment of Claims (federal)
Get Started
Factoring Express has extensive experience with government contractors across all agencies and contract types. We handle the Assignment of Claims paperwork and provide same-day funding once approved. Call 855-767-7771 or check your eligibility online.