How much cash do you need before the first payment?
You pay your crew every two weeks. The government pays you about sixty days after they start. That gap is the single most common reason a first federal service contract goes wrong — and it is arithmetic, so you can know the number before you bid. Free, no account needed.
Where the work is
Crew you have to carry
Pick a county first — the roles come from its determination.
Your other money
Insurance, vehicles, fuel, supplies, your own pay.
Equipment, bonding, uniforms, first insurance premium.
Most service contracts invoice monthly, in arrears.
The Prompt Payment Act sets 30 days after a proper invoice as the default. Raise it if your experience says otherwise.
Informational only. This is arithmetic on the figures you enter and the published wage determination, not financial, legal or accounting advice, and not a prediction of what your contract will cost or when you will be paid. Payment timing, your actual burden rates and your banking terms are yours to verify.
Why the gap exists
On a typical federal service contract you invoice monthly, in arrears — you work the whole of March, then submit an invoice in early April. The Prompt Payment Act gives the agency 30 days from receipt of a proper invoice to pay it without owing interest. So the wages you pay on the first Friday in March come back to you, at the earliest, at the start of May.
Nothing has gone wrong in that picture. That is the system working normally. Your payroll runs every two weeks regardless, and the money to cover it for those first two months has to come from somewhere that is not the contract.
What makes the number bigger than people expect
- Fringe is on top of the wage. Health & welfare alone is several dollars an hour on most determinations, and it is owed for every hour paid. See how SCA fringe works.
- Employer taxes and insurance are yours. FICA, FUTA, SUTA, workers’ compensation and general liability sit on top of wage plus fringe, and none of it counts toward discharging the fringe obligation.
- Invoices get rejected. The 30-day clock runs from a proper invoice. A rejected or disputed one resets it, which is why many contractors plan against 45 or 60 days rather than 30.
- Registration and enrollment take time. Being set up to submit an invoice at all — in the agency’s invoicing system, with banking details confirmed — is work that happens after award, not before.
What this calculator does and does not do
It prices cost, not price. The per-hour figure it shows is wage, fringe, payroll taxes and insurance — the money that leaves your account. It deliberately carries no overhead, G&A or profit, because those are how you build a bid, not what you have to fund. For the bid itself, use the free pricer or read how to price an SCA bid.
It also assumes you are staffing at full strength from day one and that the wage determination in force today is the one you will pay against. If your contract phases in, or if the determination revises before performance starts, the real number moves.
Once the first payment lands
The gap does not close. It becomes permanent working capital: you are always about one invoice cycle ahead of the government, for the life of the contract. The cash you put in at the start stays in, and it comes back at the end, not in month three. Plan the number as capital tied up, not as a bridge you cross once.
A note on financing
The usual ways contractors cover this are a bank line of credit, an SBA-backed working capital line, invoice factoring, or their own savings. They differ enormously in cost, and factoring in particular is priced per invoice in a way that can quietly consume the margin on a thin services contract. This site has no relationship with any lender and takes no referral fees; compare offers with your accountant before you commit.