The problem was that payroll regulations required that her employees had to be paid prior to her receiving her first contract payment. Though she had a stellar personal credit score, she was reluctant to take on additional debt through a loan. After researching other options, she decided to pursue invoice factoring. The first invoice due on her contract was due in 45 days and was for $100,000. With over $60,000 in payroll costs due before the invoice payment, she entered into a factoring agreement for the first several invoices which gave her time to build up her cash reserves enough to cover payroll.


Because her customer was the United States government, which is considered a respectable customer, her contract and outstanding invoices easily qualified for factoring. Though she initially only wanted to sell a single invoice in a spot factoring contract, she realized that it would take several invoices before she had enough cash on hand. She received 85% of the invoiced amount within 48 hours of entering into the agreement.

Having cash on hand meant that she was able to focus on her work instead of her cash flow. Additionally, she was able to build a better team, knowing that she had the funds available for payroll and didn’t need to cut corners when hiring.


Within a year, the business owner had secured a second contract with the U.S. government and no longer needed to use factoring to fund her business operations. She was grateful that factoring had been an option when she needed it.

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