There is a lot of attention on government contractors who are factoring their invoices for cashflow. Due to major goings on around the planet the U.S. government is buying goods and services at a record rate. Many new and young start-ups are taking advantage of the various requests that need to be fulfilled. But with bigger contracts some cash constrictions. Whether providing a product or service, these contracts eat up a lot of money, quickly.
When contacting a factoring company to help with a new government contract be aware of the NOTICE OF ASSIGNMENT. If you are the PRIME contractor (billing the government directly) and have an FAR (Federal Acquisition Regulation) contract then you need to have the contract amended to put the NOS in place. Contract regulations require that in order for payments to be made to a third party – the lender, there must be an assignment in place that sets the proceeds of the contract to that third party.
Now this is regular paperwork and all banks and lenders prepare them, but you should let your contract officer know right away that your plans will involve getting outside financing. The contract officer has to sign off (they always do) and by giving them a heads up you won’t get bogged down waiting for the NOS to go through proper channels. We are currently funding a contractor who is shipping goods over to a country far away that is getting much attention these days. Trying to get a government employee who is more worried about staying alive than signing some paperwork has been a real challenge!
So if you’re getting into the government contracting game, remember the Notice of Assignment, and put it into play as soon as possible.
