Sunday, August 31, 2014

Keith Gilabert, "Social Security Garnished by Old Student Loans"

When co-signing for your loved ones student loan keep in mind that the loan is now your responsibility.  Often times co-signers do not believe they will be bothered by a defaulted student loan.  If the loan is issued by the Department of Education it is now considered federal debt that will stay active for up to 20 years.

Here some facts you need to know:

  • In 2013 156,000 Americans social security went towards paying old student loans.
  • It's never a good idea to co-sign for a loved one's loan.
  • When you co-sign for a loan you assume 100% responsibility.
  • Private debt collectors cannot garnish your Social Security.
  • The Federal Government can only garnish Social Security not your personal IRA.
  • Government must give you 180 days notice before commencing garnishment.
  • Maximum amount of garnishment is capped at $750.00 per month or 15% of disposable income.
  • Seek an Income Based Repayment Plan from Department of Education, this could reduce the amount you owe to $0.00.
Here is additional information on student debt.

Friday, August 22, 2014

Keith Gilabert, "Funding your Payroll when Contracting with the Federal Government"

By Keith Gilabert

One of the biggest challenges a new company first encounters is funding payroll on a government contract.  When a business first captures a contract with the government it could take anywhere from 30-45 days before you can get paid.

Often times the funding could take longer than 30-45 days following the submission of your first invoice.  If the contract specifically states you need a receiving report it could take the government office 2-3 weeks to submit the report and then the government finance office could take another 2-4 weeks to cut the check.  That is almost 2 months without getting paid. 

What makes government contracts so lucrative is the size.  No enterprise spends more money than the United States Government.  The profit margins on average are between 5-7%, but the average contract is $150,000.00, so if you can secure 2-3 contracts per month you will have a very profitable firm.  The problem is you will be out $150k waiting 2 months to get paid.  A way to work through this is by getting payroll financing.
The government requires that all Invoices must be submitted on the 1st of the month. But your first invoice cannot be submitted until you’ve had 2 payrolls and in most cases, payroll is made on the 15th and the 30th of the month. 
You should be aware that there are exceptions to the length of time it takes for payroll. Things can happen that may hold-up the payment process. I’ve seen invoices get hung up in the system to anywhere from 90-180 days from the submission of your first invoice, depending upon the cause for the hold-up.  This is rare but it does happen.
Be prepared to wait it out in the beginning and have the financing in place to keep you and your employees afloat. You may find that you have to wait a full 5 payrolls before finally getting paid. When contracting for the government, you want to fully understand what you’re getting into and you want to ensure that you have the right lender to fund your contracting project(s).
Choosing the wrong lender could lead to untimely problems for both you and the lender, because lenders who are not familiar with government policies regarding this type of funding typically end up a thing of the past.
Exceptions that Could Cause Slow Payment
These are a few problems that could arise causing slow payroll funding for government contractors:
·         A Contractor Not Invoicing Correctly
·         A Lost Invoice
·         Misdirected Payment
·         Payment Office Relocation
·         Depleted Funding
·         Redirected Funding
The most prevalent reason for slow payment is the failure on the part of the contractor to submit their invoice correctly according to the contract. When taking all of these slow payment factors into consideration, it’s important to know that these problems very rarely affect commercial contractors.
Lender Problems when Slow Payment Occurs
Choosing a lender that is not experienced in dealing with the federal government could lead to financial distress for both you and the lender. This is because the lender expects to receive payment in an allocated amount of time.
If payment is held up due to an invoice issue or any of the other reasons listed above, the lender suffers a financial loss and it could also affect future funding for the contractor by the lender. This then has a domino effect and could harm the contractor’s relationship with the government client if the money is not there to complete a project.

When a project is not completed on time the contractor will suffer a low rating from the government which will affect your ability to attain any future projects.

Choosing an Appropriate Lender
When you need to select a lender to fund a government contracting project, you want to make sure to select a lender that is familiar with government payroll funding. This is not a cut-and-dry process. There is a lot of paperwork involved and government regulation to take into consideration.
During the lender selection process, you need assistance. Seeking out the assistance of an expert who can help you connect with an appropriate lender will eliminate future problems and ensure that all of the required paperwork is in order for timely payment.
To learn more information regards to funding for government contractor, contact us today.