Building a Cash Flow Bridge for NET 60 Contracts

NET 60 means exactly what it sounds like: the government has up to 60 days to pay an invoice after you submit it. Meanwhile, payroll doesn't wait 60 days, it comes every two weeks, on schedule, whether or not the invoice has cleared.

That mismatch isn't a sign anything's gone wrong. It's built into the payment terms of the contract you won. The gap is predictable, which is exactly why it's plannable, you don't have to discover it in real time, and you don't have to cover it out of your own savings.

Here's how to build the bridge.

Calculate your actual gap. Look at your specific contract: how many days, on average, between when you incur a cost and when you actually receive payment for it? For a NET 60 contract with a normal billing cycle, that gap is often 75–90 days once you account for invoice preparation and processing time. That number, not a guess, is what you're bridging.

Size your bridge to that gap, not a round number. Take your average monthly burn rate on the contract (mostly labor) and multiply it by the number of months in your calculated gap. That's roughly how much cushion you need before the first invoice clears.

Compare your three main options. A cash reserve is the simplest and cheapest long-term, but it takes time to build and ties up capital. A line of credit gives you flexibility and you only pay for what you draw, but it requires qualifying in advance, apply before you need it, not during a cash crunch. Invoice factoring or accounts receivable financing gets you paid faster against invoices you've already submitted, at a cost, and can be the fastest option to stand up if a contract lands sooner than expected.

Set it up before you need it. Ideally, this happens before you're deep into contract performance, during proposal prep or right after award, while you still have breathing room to shop rates and terms. It's still worth doing mid-contract; it's just a tighter runway.

Revisit the size of your bridge every time your contract mix changes. Win a second contract, add a subcontractor, or shift to a bigger scope, and your burn rate changes with it. The bridge that covered you last year may not cover you now.

None of this requires predicting the future. It requires doing the arithmetic on payment terms you already know, once, and building a plan around the answer instead of your bank balance.

If you want the fuller walkthrough of how cash flow, clean books, and contract profitability fit together, start with the Free Cash Flow Training.

And if you're currently floating a payment gap yourself and want a plan instead, book a GovCon Financial Readiness Call.