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Government Contractors: New Small Business Funding with Accelerated Payments

Thomas C. Yankanich, CPA
Thomas C. Yankanich, CPA Director, Audit & Accounting, Leader - Government Contracting, Professional Services, and Architecture & Engineering Industry Groups

As of February 14th, 2023, a rule by the Defense Department (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) has made accelerated payments applicable to contracts with certain small businesses.

This could mean big things for small businesses like yours…

What Was the New Ruling for Accelerated Payments?

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 is supporting small businesses by implementing 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 funding to meet their financial obligations and invest in their businesses.

Under this program, small business contractors who 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.

Benefits of the Government’s Accelerated Payments Funding for Small Businesses

The benefits of accelerated payments for small business contractors are numerous, however, we want to bring attention to perhaps the three largest.

1. Improved Cash Flow

First and foremost, these payments help to improve cash flow, which is critical for small businesses that may need access to the same financial resources as larger companies.

With money to use quickly, small businesses can invest in new equipment, hire new employees, and expand their operations.

2. Strengthened Relationships

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.

3. Future Small Business Growth Opportunities

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 funds to small businesses, with a target of awarding 23 percent of prime contracts to small businesses by 2023.

Is Your Small Business Eligible for Accelerated Payments?

To be eligible for accelerated payment funding, small business contractors must meet certain criteria, including:

  1. Being registered in the System for Award Management (SAM)
  2. having a valid Taxpayer Identification Number (TIN), and
  3. 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.

Take Advantage of Accelerated Payments for Small Business Contractors

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 funding program to help them thrive in today's competitive business environment.

Explore our services for Government Contractors.

Contact the Author

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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