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Accelerated Payments for Small Business Government Contractors

April 26, 2023 3 Min Read Government Contracting
Thomas C. Yankanich, CPA Director, Audit & Accounting, Leader - Government Contracting, Professional Services, and Architecture & Engineering Industry Groups

Small businesses often face significant cash flow issues that can impede their growth and ability to compete effectively in their respective markets. These cash flow issues are often exacerbated when small businesses are awarded government contracts, as they typically must wait for several weeks or even months to receive payment for the services or products they have provided.

To address this issue, the U.S. government has implemented a program known as Accelerated Payments for Small Business Contractors. This program requires federal agencies to accelerate payments to small business contractors, providing them with the necessary funds to meet their financial obligations and invest in their businesses.

Under this program, small business contractors that are eligible for an accelerated payment may receive their payments within 15 days of the government receiving an invoice for the goods or services provided. This is a significant improvement over the standard payment timeline, which can range from 30 to 90 days, depending on the agency and the type of contract.

The benefits of accelerated payments for small business contractors are numerous. First and foremost, these payments help to improve cash flow, which is critical for small businesses that may not have access to the same financial resources as larger companies. With improved cash flow, small businesses can invest in new equipment, hire new employees, and expand their operations. Accelerated payments can also help small businesses build stronger relationships with their government customers. By providing timely payments, the government demonstrates its commitment to working with small businesses and supporting their growth and success.

The Accelerated Payments for Small Business Contractors program is part of a broader effort by the U.S. government to increase contracting opportunities for small businesses. In recent years, the government has set ambitious goals for awarding contracts to small businesses, with a target of awarding 23 percent of prime contracts to small businesses by 2023.

To be eligible for accelerated payments, small business contractors must meet certain criteria, including being registered in the System for Award Management (SAM), having a valid Taxpayer Identification Number (TIN), and having a contract with a federal agency that includes the Accelerated Payments clause. The clause is typically included in contracts valued at less than $50 million and is optional for contracts over that threshold.

The Accelerated Payments for Small Business Contractors program is a valuable tool for small businesses that work with the federal government. By providing timely payments, the program helps to improve cash flow, strengthen relationships with government customers, and support the growth and success of small businesses. Small businesses that are eligible for accelerated payments should take advantage of this program to help them thrive in today's competitive business environment.

If you would like to discuss how this program can benefit your small business, please contact Thomas Yankanich, Director, Audit & Accounting and Government Contracting Group leader, or any member of our Government Contracting industry group.

Thomas Yankanich can be reached at Email or 215.441.4600.

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Thomas C. Yankanich, CPA

Thomas C. Yankanich, CPA

Director, Audit & Accounting, Leader - Government Contracting, Professional Services, and Architecture & Engineering Industry Groups

Government Contracting Specialist, Architecture & Engineering Specialist, Professional Services Specialist, ESOPs Specialist, Owner Operated Private Companies Specialist, Private Equity-Backed Companies Specialist

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