Have Something to Sell? The Government Wants to Buy from You

Small business owners especially women-owned and minority companies should seriously consider selling to government entities. Why? Because the government buys everything. And the government pays.

 

In all of my years as a factor of government receivables, all of the receivables have been paid except in one case and that was not the fault of the government.  The government uses vendors in most industries, and most importantly, pays its receivables.  Just what is a government receivable?  It is an invoice paid by any government entity such as a state, city, county, or federal government.   It can include prisons, day care centers, and schools.  It may be a receivable of a small company providing goods or services to a large prime contractor doing business with the government and where the small company is working as a subcontractor to the larger prime contractor.

A company does not have to be certified, but it helps

Certifications like 8(a) and HUBzone may be helpful as part of a marketing strategy, but are certainly not required for Federal sales.  However all vendors must have their CCR number (Central Contractor Registration) which is mandatory to sell to the government.  A CCR number can easily be obtained by a small business owner. He or she must go online, to the SCORE office or contact an SBA office to fill out the necessary form.

Score and SBA officers will gladly help you.  It only takes a short time to receive your CCR number and then you can bid on whatever service or product the government wants and that you can deliver.    It is very helpful to be certified as a minority or women-owned business as the government looks at government bidding schedules to choose their vendors and it is much easier for them to choose a company that knows what the government wants and expects and has done so previously.

Congress passed the Assignment of Claims Act in 1986 to help small business owners get the working capital that is needed to complete the job.

I have found that even though companies win government contracts, they need money to pay payroll on time, or to buy supplies to do the job, and need this money before the job is complete and paid.  As you probably know, the government is trying to pay faster, but sometimes it is 45 to 90 days or longer before a contract is paid. And that is why Congress passed the Assignment of Claims Act in 1986.  This act states “a contractor or its assignee may assign its right to receive payment due as a result of performance,” to a financing institution. This assignment of invoices is known as “factoring” or Accounts Receivable Funding.

The government encourages this method of funding because it keeps the job moving towards its completion date.  Another reason Congress passed this Assignment of Claims Act is because they realized alternative funding sources, such as factoring companies, might be a better fit than traditional lenders.  Why?  They are more expedient and do not require collateral other than the receivable produced.

Banks require longer periods of time to fund.  Sometimes, such as in the recent case of Cindy, government vendors were expected to mobilize and perform quickly, as time was of the essence.  As a vendor, a company must have the necessary capital to produce goods or pay personnel to perform on the contract awarded.  With a contract called an IDIQ contract, meaning indefinite delivery, indefinite quantity, the vendor may be required to deliver nothing one month and then $300,000 worth of product or service the next month.  This requires flexible funding.  Factoring companies, which advance funds on receivables immediately after the invoice is generated, allow companies that are factoring to bid on almost any contract since the company knows it can get the necessary funds to pay payroll, buy discounted supplies, and complete the contract on time.

How can companies find out what the government wants?

Aspiring government vendors can use university newsletters to see what work needs to be done.  In fact all government agencies have lists showing what they need and when the bid needs to be submitted in order to be considered.  Attending seminars and talking with government procurement agents also helps to let the government know who you are and what you do.  Attending Small Business Week in your city and networking with the people you see also help you find government procurement agents and factors who look forward to helping you obtain government contracts and get funding you need to complete it on time.

Factoring is used by business owners all over the globe. Joy Ann Venverloh, President of Lexx Funding, Inc. has been factoring government receivables since 1998. If you would like to know more about the advantages of factoring and if it is right for your business, please contact Joy Ann @ 636 458 2612,  email to joyann@lexxfunding.com or go to the website www.lexxfunding.com.

Helpful Government websites showing bidding requirements:
www.fbo.gov – where most bidding opportunities over $25k are posted.
www.aptac-us.org– Association of Procurement Technical Assistance Centers – find your local PTAC to get help with selling to government
farsite.hill.af.mil/– The Federal Acquisition Regulation lays out rules of the road for Federal Sales.

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