How a flexible factoring solution simplifies government contracting
The Challenge
As a government contractor, invoice payment terms could extend beyond 60 days. Our client needed to unlock the cash in these unpaid invoices to order supplies and take more orders. Flexibility was also important due to the seasonality of their sales cycle.
The Solution
Factoring their government contract invoices gave them access to the funds from unpaid invoices in as little as 24 hours. Plus, the flexibility of the line means they can increase or decrease the amount they factor depending on their business needs.
“It really is hassle free. eCapital makes it simple. You send through the documentation online and the factoring line is in your account when you expect it. It’s just a process that works.”
The Story
As a global provider of technology and software to school districts, universities, government agencies and the armed forces, our client supports organizations and businesses in 30+ countries around the world.
“We design the tech and software in-house and manufacture the products overseas. Efficient inventory and logistics management is key to our business.”
Government contracts typically have payment terms of Net 30, Net 45 or even Net 60 days. Holding inventory in the warehouse means working capital is tied up in product. Seasonality was also a concern, with most schools and universities ordering in the spring for the new school year and sales slowing during the winter months.
“We needed to maximize what we have. Sitting on inventory while waiting up to two months for payment would cripple our business operations.”
An invoice factoring facility allowed our client to release cash flow and keep their business moving by receiving payment for their outstanding invoices within 24 hours. Faster access to capital means they can move on to the next deal without worrying about the inventory in the warehouse and the flexibility of the line makes managing seasonality a breeze.
“We have doubled our line since partnering with eCapital. During our busy season, we use more of the factoring line to help us take on more orders. When things slow down, we pull back.”
What This Means For You
Factoring is a good solution for your business if you:
- Trade with other businesses
- Issue Invoices with up to 90-day payment terms
- Are an established business or a startup
- Are unable to obtain traditional bank financing
- Are unable to increase an existing line of credit
- Want to finance growth or expand into new markets
- Need to cope with season fluctuations
“We have had zero bad debt in 5 years. If we want to check on a potential customer, I call my Account Manager and he runs the credit check and tells me the line amount available for that customer. It’s great!”
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