Construction invoice factoring helps companies grow and gives you the confidence to compete for larger contracts. We work with all types and sizes of construction companies and sub-contractors. No matter if you’ve been around for years or if you are a recent start-up, a construction factoring company can get you instant cash.
What Funding Challenges Does the Construction Industry Face?
- Construction businesses face the challenge of staying ahead of the competition, and having some extra cash can help them fund faster business growth, allowing them to invest in resources and strategies that give them a competitive edge.
- Construction businesses have operation costs that are usually non-negotiable, including expenses such as payroll, equipment, tools and supplies, office space, business insurance, sales and marketing expenses, legal fees, utilities and rent, and fees for maintaining locally mandated certifications.
- Construction businesses need to prepare for various financial risks and uncertainties, such as potential lawsuits, dealing with non-paying clients, unexpected losses due to factors like accidents or material shortages, and economic downturns that can impact the demand for construction projects.
- Construction businesses require extra capital to be prepared for various situations, such as getting sued, paying overtime hours, dealing with clients who won’t pay, competing for more and larger jobs, handling unexpected losses, and facing economic downturns.
What is Construction Factoring?
Construction factoring is the solution to your cash flow challenges. Slow-paying clients are typical in the construction industry, but unpaid invoices shouldn’t hold your business back from accepting new, larger projects. Factoring provides the funds you need to increase construction staffing efforts and cover employee payroll, cover upfront costs and purchase the necessary equipment.
Benefits of Invoice Factoring for Subcontractors and Construction Companies
Stop waiting to be paid. Factoring is a smart short-term or long-term financing option. Here’s why many in the industry choose factoring for their financing needs:
- Fast funding – Get cash for receivables in 24 hours or less
- No long-term contracts
- No hidden fees
- Easy and fast approval
- Unlimited funding potential
How Does Construction Factoring Handle Unexpected Losses?
Construction invoice factoring provides a reliable solution to handle unexpected losses in a construction project. With this financial tool, construction companies can easily manage equipment breakdowns, worker strikes, and even natural disasters. By leveraging invoice factoring, construction businesses can access immediate cash flow, allowing them to face unexpected setbacks with confidence and minimize any delays or interruptions in their projects. This financial flexibility ensures that construction companies can efficiently address any unforeseen expenses or temporary disruptions, helping them to stay on track and successfully complete their construction projects.
How Can Construction Factoring Help With Clients Who Won’t Pay?
Construction invoice factoring can be a valuable solution when dealing with clients who are reluctant to pay. In some cases, even the most pleasant clients may encounter financial difficulties during a project or choose to delay their payments. Additionally, there are instances where clients express satisfaction with the work but refuse to fulfill their payment obligations, potentially leading to a complicated legal battle.
Engaging with a well-experienced factoring company specialized in collections can greatly assist in recovering the outstanding payments from these clients. Factoring companies provide a service where they purchase your unpaid invoices at a discounted rate, providing you with immediate cash flow. This arrangement allows you to receive a significant portion of the outstanding funds without having to wait for the clients to pay.
By leveraging the expertise of a factoring company, you no longer have to spend excessive time and energy chasing after clients who are unwilling to fulfill their financial commitments. The factoring company will take responsibility for the collections process, employing their knowledge and strategies to effectively recover the unpaid amount from the clients on your behalf.
In addition to saving you the hassle of chasing down payments, construction invoice factoring also provides you with the financial stability necessary to continue with your operations and take on new projects. The infusion of immediate cash flow enables you to cover your own expenses, pay your suppliers and subcontractors promptly, and maintain a steady workflow without being dependent solely on the payments from reluctant clients.
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How Does Construction Factoring Work?
Construction invoice factoring is a useful financing option for construction companies. With construction invoice factoring, a construction factoring company purchases your open construction invoices at a discount and provides you with an advance payment of around 70 – 80 percent of the cash. This upfront cash can be used to finance essential aspects of your business, such as payroll, equipment purchases, and supplier payments.
Here’s a more detailed breakdown of how construction invoice factoring works:
- Invoice Purchase: The construction factoring company buys your outstanding invoices at a discounted rate. This allows you to receive immediate cash flow instead of waiting for your customers to pay.
- Cash Advance: Upon purchasing your invoices, the construction factoring company provides you with an advance payment of 70 – 80 percent of the invoice value. This gives you quick access to funds to meet your business needs.
- Customer Billing: After purchasing the invoices, the construction factoring company takes responsibility for billing your customers based on the rates and terms you’ve set. They handle the invoicing process, ensuring that your clients are aware of the new payment instructions.
- Payment Collection: The construction factoring company takes charge of collecting payments directly from your clients. They communicate with your customers regarding the invoice factoring agreement and provide them with updated instructions for making payments.
- Remaining Balance: Once your customers pay off their invoices, the construction factoring company returns the remaining balance to you, minus a small factoring fee. This fee covers the services provided by the factoring company, including credit checks, invoice management, and payment collection.
By utilizing construction invoice factoring, you can improve your cash flow and maintain a steady financial position. It allows you to access immediate funds, eliminate the stress of waiting for payments, and focus on growing your construction business.
Why Work With a Construction Factoring Company?
Factoring construction invoices sets your company up for success. Obtaining construction financing through a bank requires a lengthy application process and stringent approval terms. If your company lacks collateral or has less than perfect credit, you may not be approved. Even if approved, it’s likely you may not receive adequate funding.
Factor Finders can get your construction company the funding you need – with no debt. Not to mention, factoring construction invoices helps build your credit because now you have the working capital to take on more customers, bid on larger jobs and pay your suppliers with ease.
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Funding for Any Type of Construction Business
We understand the cash flow challenges commercial construction companies face. Factoring construction invoices is a fast and simple way to improve your cash flow today. Contact us if you’re looking to start a new project or need funds to move on to the next phase of a project.
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How Does Construction Factoring Work?
A construction factoring company purchases your open construction invoices at a discount and advances you between 70 – 80 percent of the cash. Use the money to finance payroll, purchase equipment, pay suppliers, etc. Then, the construction factoring company bills your customers at the rate and terms you’ve set. Once the invoices are fully paid, the remaining balance is returned minus a small factoring fee.