Selling products to the government can be rewarding for businesses. There are $300,000,000,000+ (spds.gov) in government contracts allotted to small business annually. Providing opportunities to small companies can help spur business growth, but can also put organizations in a financial bind. Purchase order funding for government contracts helps businesses perform on contracts regardless of size.
Small companies often lack working capital to deliver on large purchase orders—which is typically the case when working with government agencies. Winning a bid that you can’t fulfill will hamper the success of your organization. Turning to traditional business loans for fast and expensive cash has its downfalls.
Smarter Financing – Purchase Order Funding for Government Contracts
Purchase Order Funding is a type of financing that allows businesses to fill orders. Access to capital helps avoid the risk of late delivery or losing a government contract altogether. STAR Funding will also consider Work-In-Process funding.
Finding the right government purchase order financing company will allow you to bid on opportunities you otherwise would not have due to capital constraints. Once you understand the financing limitations of your lender you will be able to bid on whatever opportunities you can fill logistically.
Advantages of Purchase Order Funding for Government Contracts
- Permits companies to bid on large government contracts.
- Clients can receive funding for up to 100% of cost of goods.
- PO Funding provides greater availability than standard business loans.
Finished Goods Financing
Funding a PO for finished goods is the most common type of purchase order financing. It involves the purchase of goods for resale that don’t require any assembly or customization prior to reselling.
Finished Goods Financing is highly preferable to typical short-term loans and typically comes with a much more favorable interest rate and turnaround time.
Work in Process (WIP) Financing
PO Funding for WIP involves purchasing components or raw materials that require assembly prior to sale. The process is more complex than finished goods financing. Additionally, the standard costs of work in process PO funding is greater.
However, work in process may not require 100% funding of raw materials. The costs of funding the invoice may be significantly less than funding 100% of the finished product cost.
Applying for Funding is Easy with STAR Funding
It is important for you to find an experienced lender when financing government contracts. Familiarity with the Assignment of Claims Act is crucial. Not following proper guidelines will result in payment delays and cancelled contracts.
The knowledgeable team at STAR Funding has years of experience helping companies finance government contracts. Regardless of the PO funding option you need, we review and deploy funds in just a few days. STAR provides up to 100% funding for a transaction. Contact STAR today to discover how we can help you win more business.