Preparation begins with understanding whether the organization can support rapid growth before opportunity arrives.
The federal government is moving to streamline procurement, and agencies are responding by seeking to accelerate acquisitions. But a fast-moving contracting environment provides challenges, too, especially for new entrants who have gotten a few contracts but aren’t sure how to expand. The companies I’ve seen succeed are those that understand that behind every technical capability on the request for proposals (RFP) is a financial strategy that can handle tough times like 2025, good times like what we’re seeing for FY2027, and everything in between.
Isn’t winning the contract the hard part?
Financing a contract can be just as challenging as winning new business.
Every experienced contractor understands that getting the business is only the beginning. Before the first invoice is processed, companies often need to recruit employees, purchase equipment, onboard subcontractors, obtain security clearances, expand facilities and meet payroll. That means committing revenue before the cash comes, sometimes 45 or 90 days after contract completion and 180 days after the company started spending money on equipment and supply chain.
Successful executives recognize this reality long before the contract is awarded. They understand their cash position, borrowing capacity, working capital requirements, and financial forecasts as thoroughly as they understand their capture strategy.
Financial readiness lays the groundwork to execute immediately instead of scrambling after the award or risking financial problems before the government client pays.
Leading with financial readiness
Many government contractors begin exactly as they should: founder led. The chief executive officer develops customer relationships, pursues opportunities, builds teams and establishes the vision. During those early years, founders often manage back-office responsibilities themselves.
With growth, those back-office responsibilities become unsustainable. Soon enough, someone needs to own forecasting, financial reporting, borrowing relationships, compliance and cash management. Those essential responsibilities must not consume the CEO’s attention.
I’ve seen this lesson play out many times. A staffer or team dedicated to financial and accounting functions allows leadership to stay focused on mission, growth and strategy.
Smaller contractors may be hesitant to hire a full-time chief financial officer, and even larger companies operate with an understandable cost-cutting mindset. But savvy leaders will not risk reserving cash in the present moment only to lose mindshare and market positioning that could elevate their company.
For the cash-strapped CEO starting out, there are many lower-cost options in the market. Fractional CFOs, outsourcing to accounting firms, and even part-time positions are practical solutions that offer relief on overhead. When the CEO has to focus on sales and team management, having the best financial support — even just a few hours a week — is a gamechanger.
How can contractors prepare for the next phase of government contracting growth?
Every contractor wants to be ready when the next opportunity appears. Preparation begins with understanding whether the organization can support rapid growth before opportunity arrives.
That means asking straightforward questions:
- Is our working capital sufficient to support multiple new awards?
- Do we have financial reporting that supports timely decision-making?
- Can leadership quickly determine whether to hire, invest, borrow or wait?
- Is the CEO spending time building the business or managing the back office?
Contractors often devote enormous attention to essential capabilities such as capture strategy, proposal development and customer engagement. But companies that outperform competitors place financial strategy on the list of “must-haves” as well.
Federal procurement is moving faster. The markets immediately surrounding Washington, D.C., are positioned to swell the most, which means tremendous opportunities for up-and-comers who set themselves up to win. Those contractors will be set to move quickly and get a piece of the pie.
The firms that build lasting competitive advantages won’t simply be those that understand the Federal Acquisition Regulation. They’ll pair good old business intuition and vision with conscientiousness about the financials. They’ll understand their own balance sheet well enough to act confidently — and the rewards will roll in.
Khoa Vu is chief financial officer for Parabilis.
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