Does the Government Pay Early for Contracts? Key Tips and Strategies

Does the government pay early? The short answer is, no. Most of the time, the federal government doesn’t pay you early. So, if you’re considering getting into government contracting, it’s important to have a solid financial strategy in place.

Building a Strong Financial Strategy

When working with the government, payment usually arrives around 30 to 60 days after services are provided or goods are delivered. This can be a challenge, especially if you’re just starting out. But there are a few things you can do to make sure you’re prepared.?

Get Your Cage Code and Register on SAM.gov

To work with the government, you’ll need a Cage Code and to be registered on SAM.gov. It’s the first step in bidding and securing contracts with federal agencies.?

Getting your Cage Code will allow you to compete for contracts and get your business recognized by the government.

Plan for Cash Flow Needs

You’ll need to plan ahead for cash flow. Be sure to keep the following things in mind:

• Look for service-based contracts where you can pay employees or contractors later, around 30 to 60 days after you receive payment from the government.
• Consider factoring, which allows you to sell your invoices for cash up-front. This can provide immediate working capital.
• Use credit cards or short-term loans. If your business has a credit card, you can use it to cover expenses until the government payment arrives.
• Check out financing options available to you, such as hard loans or even business lines of credit.

Check Your Credit and Financial Health

Some people worry about credit when starting in government contracting. If you’re not sure of your credit, check your free credit report at annualcreditreport.com.?

And if you have poor credit, take small steps to improve it, like paying off balances when possible. Poor credit doesn’t have to keep you down. Many businesses start small and grow over time.

Build Relationships and Negotiate Payment Terms

For contracts with higher upfront costs (like gravel, fencing, or hotel contracts), talk with your suppliers or partners about payment terms. Some companies might allow you to pay later or even extend credit. It’s especially helpful if you’re supplying services like catering, where upfront costs are higher. Building strong relationships with suppliers can give you more flexibility with payments.

Add to Your Income

If cash flow is a struggle, figure out some ways to add to your revenue. For example, you could get a part-time job with a government contractor like Lockheed Martin to learn the business while earning income. Gaining experience in contracting can also give you a leg up in your own government contracting journey.

Stay Persistent

Success in government contracting doesn’t come overnight. You may need to try different contracts, manage cash carefully, and work out creative solutions to fund your contracts until payment arrives. Keep your focus on winning contracts and developing strategies that allow you to fulfill them successfully.

Now, I hope I’ve opened up your eyes to all the possibilities out there that result when you’re prepared and have a strong mindset. If you need more practical tips, then subscribe to my official YouTube channel.?

Click here now to subscribe to my official YouTube channel.

________________________________________________________________ I’m the author of the newly released book “The GovCon Winners Way: How To Win Government Contracts Faster Than Trying to Do It Alone!” At 28, I was awarded my first 5-figure federal government contract. I own and operate multiple government contracting businesses and have over $50 million in federal government contract awards. Today, I’ve helped my students win over $3M in Federal Government Contracts in less than 6 months, and I’ll help you, too!?

-#EverythingIsPossible