Invoice Factoring for Government Contractors
Government receivables are excellent credit and administratively awkward. The Assignment of Claims Act is why.
A federal receivable is close to risk-free credit, which ought to make it cheap to factor. The complication is legal rather than financial: assigning a claim against the United States government requires a specific statutory process, and not every factor can execute it.
The Assignment of Claims Act
Assigning federal receivables requires formal notice to the contracting officer and the disbursing office, executed correctly and formally acknowledged. Done properly it is routine. Done incorrectly, or by a factor who has not done it before, it can delay funding by weeks and occasionally fail entirely.
Ask any prospective factor two direct questions: how many Assignment of Claims filings have you completed, and how long does the acknowledgement typically take? A specific answer indicates real experience; a vague one indicates you would be their learning experience.
State and local contracts
State and municipal contracts follow their own rules, which vary by jurisdiction and are occasionally more restrictive than federal. Some prohibit assignment outright.
Check the assignment clause in your prime contract before assuming the receivable is factorable at all. This is a five-minute check that prevents a wasted application.
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Prime versus subcontractor
This distinction changes the whole analysis. If you are a prime contractor, you are factoring government credit — excellent quality, slow but certain payment. If you are a subcontractor to a prime, you are factoring the prime's credit, not the government's. The receivable is only as good as the prime, and it should be priced and assessed accordingly.
Factors know this distinction well. Make sure you do too before you accept a quote built on the assumption that you hold the government paper.
Before you sign
- Does your prime contract permit assignment at all?
- Has the factor completed Assignment of Claims filings before, and how many?
- How is funding timed against the government's payment cycle, which is predictable but slow?
- If you are a sub, whose credit is actually being underwritten?
- How are contract modifications and change orders handled mid-facility?
How to read the blanks on this site
Every populated figure on this site was read from the company's own published pages, with the source and date attached. Where a cell says Not published, the company does not put that term in writing on its site — and in a market where the contract matters more than the headline rate, what a factor declines to publish is often the more useful signal. We never fill a gap with an estimate.
Who it fits
Contractors whose growth is limited by the gap between performing and being paid on long federal cycles, and who have the documentation discipline government work demands anyway. Government receivables are among the best credit a factor can buy — the friction is administrative, not financial, which means the right factor makes it straightforward and the wrong one makes it painful.