Invoice Factoring for Government Contractors

A federal receivable is close to risk-free credit, which should make it cheap to factor. The complication is legal rather than financial: assigning a claim against the US government requires a specific statutory process.

The Assignment of Claims Act

Assigning federal receivables requires formal notice to the contracting officer and the disbursing office, executed correctly and acknowledged. Not every factor is set up to do this. Ask directly whether they have completed Assignment of Claims filings before, and how long it typically takes.

State and local

State and municipal contracts follow their own rules, which vary and are occasionally more restrictive than federal. Some prohibit assignment outright. Check the contract's assignment clause before assuming the receivable is factorable at all.

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Before you sign

• Does your prime contract permit assignment?
• Has the factor handled Assignment of Claims filings before?
• How is funding timed against the government's payment cycle?
• If you are a subcontractor to a prime, you are factoring the prime's credit, not the government's — price accordingly