The NET 60 Gap: What Happens Between Winning the Contract and Getting Paid

You won the federal contract. Congratulations, now comes the part nobody puts in the proposal: the wait.

Most government contracts pay on NET 30, NET 60, or even longer terms. That means the work is delivered, the invoice is submitted, and the money doesn't land for one, two, sometimes three months. Meanwhile, payroll doesn't wait. Rent doesn't wait. Your subcontractors don't wait either.

This is the post-award reality that catches new and growing government contractors off guard: winning the contract and getting paid for the contract are two completely different financial events, separated by a gap that can stretch for months.

Why NET 60 Exists

Federal payment terms aren't personal, they're structural. Government invoicing runs through layers of review, and NET 60 (or similar) is standard on many contract vehicles, especially cost-reimbursable and larger prime contracts. It's not going away, and it's not negotiable in most cases. Which means the only variable you actually control is how ready you are for it.

The Math Nobody Does Before Signing

Here's the calculation every contractor should run before mobilizing on a new award: take your payroll cycle (weekly, biweekly, semi-monthly) and figure out how many full cycles will pass before your first invoice clears. On a NET 60 contract with biweekly payroll, that's roughly four payroll cycles, two months of payroll, benefits, and overhead, that has to be funded before a dollar comes back from the government.

Most contractors don't have that sitting in reserve. So they end up doing one of three things: draining personal savings, maxing out a credit card, or scrambling for financing mid-contract when leverage is lowest and terms are worst.

Three Ways to Bridge the Gap

Size a cash reserve to your actual payment terms. Not a generic "three months of expenses" rule of thumb, a reserve calculated specifically against this contract's payment cycle and your payroll obligations.

Set up financing before you need it. A line of credit is far easier to secure, and far cheaper, when your books are current and you're not in a cash crunch. Waiting until month three of a NET 60 gap to apply is the hardest possible time to get approved.

Consider invoice factoring selectively. For contracts where the margin can absorb the fee, factoring turns a 60-day wait into cash in days. It's not free money, but for the right contract, it buys you breathing room.

Bill on milestones wherever the contract allows. The sooner an invoice goes out, the sooner the 60-day clock starts. Contractors who wait to batch invoices are extending their own cash gap unnecessarily.

The Real Lesson

Winning the award is the visible milestone, the one you post about, the one that feels like the finish line. But the financial test of a government contract isn't the award. It's whether you can fund the work in the gap between delivery and payment without your business absorbing all the risk.

Contractors who plan for the NET 60 gap before mobilization treat it as routine. Contractors who don't find out the hard way, usually around payroll number three.

If you're preparing for a new award, or you're already inside a payment gap and feeling the squeeze, start by understanding exactly how cash flow, clean books, and contract profitability work together, the Free Cash Flow Training walks through it.

And if you already know your cash flow plan for this contract isn't where it needs to be, don't wait for the crunch to hit, book a GovCon Financial Readiness Call and we'll build the plan together.