#CASHFLOW 101 SYSTEM SERIES#

“Final” indirect rates are reallocated to the project once the contractor’s fiscal year is complete. A “provisional” forward looking indirect allocation is pre-negotiated with the cognizant government agency. If offered milestone payments, an attentive CFO will ask for front-loaded or advance payments to build up a cash reserve.Ĭost-plus type contracts bill for products and services where actual project costs are submitted along with an allocation of indirect costs and fee. Payment amounts may or may not be the same.

#CASHFLOW 101 SYSTEM SERIES#

Invoices are submitted and payments made on a pre-negotiated schedule coinciding with one or a series of deliverable services or supplies (technical report, product delivery). While these techniques are somewhat arcane, the good news is there are only a handful.įixed price contracts routinely use milestone payments to finance a contractor’s effort.

More troublesome for a CFO is navigating the variety of peculiar billing mechanisms and requirements the government imposes. The government prefers electronic transfer of funds. Gone are the days of checks being mailed. Plus, the government will pay all “allowable” costs. In some circumstances, advanced funding on a contract or grant can be secured. First, the government is required by law to pay valid invoices within 30 days (FAR 32.9 – Prompt Payment Act), sometimes paying within days of submitting an invoice. To a great extent, government contractors and grant recipients may not have to seek outside financing for their operations for a number of reasons. Government Contractor CFO Services - Cashflow Management IĬash is king for most fledgling businesses, and no less so for government contractors.

Cashflow 101 system