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 construction business back from accepting new, larger projects. Factoring your construction invoices provides the funds you need to increase construction staffing efforts and cover employee payroll and upfront construction costs, and purchase necessary equipment.
How Does It Work?
A factoring company purchases your construction invoices for work that has been completed and advances you between 70-80 percent of the amount. You can then use the money to finance payroll, purchase equipment, pay suppliers, etc. Then, the factoring company bills your customers at the rate and terms you’ve set. Once the invoices are fully paid, the remaining balance is returned to you, minus a small factoring fee.
Get a Factoring Quote for your Construction Invoices
Pros and Cons of Construction Factoring
Like any financing option, there are pros and cons to construction factoring. We’ve listed them below so you can make an informed decision.
Pros of Construction Factoring
- Immediate cash flow – Construction factoring provides the money your business needs quickly. Once approved, you can get access to the working capital you need in as little as 24 hours.
- Faster payments – Instead of waiting for slow-paying clients, construction companies can get paid faster by selling their invoices to a factoring company.
- Less hassle with non-payment – Factoring your construction invoices can help mitigate the stress of dealing with non-paying customers. The factoring company assumes the responsibility of collecting payment from your business’ clients.
- Flexibility – Construction companies can choose which invoices to factor and when, giving them the flexibility they need.
Cons of Construction Factoring
- Factoring cost – Factoring companies charge a small fee for their services. The fee can range from 1-5 percent depending on the creditworthiness of your business’ clients and the volume of invoices being factored.
- Loss of collections control – When selling your invoices to a factoring company, you lose control over the collection process and may have to deal with the factor’s collection practices.
- Restrictions – Some factoring companies may have restrictions on the type of invoices that can be factored, the creditworthiness of your clients, and the volume of invoices you factor.
Why Work With a Construction Factoring Company?
Construction factoring helps companies grow and gives your business the confidence and security to compete for larger contracts. Factor Finders works with all types and sizes of construction companies and sub-contractors. It doesn’t matter if you’re a recent start-up or if your business has been around for years, a factoring company can work with you to get the cash you need.
Factoring your construction invoices can set your company up for success. Obtaining construction financing through a bank requires a lengthy application process and stringent approval terms. If your company lacks the collateral or has less than perfect credit, you may not get approved. Even if you are approved, it’s likely you may not receive the adequate funding you need for your business.
- Fast funding – Get the cash you need in 24 hours or less
- No long-term contracts
- No hidden fees
- Easy and fast approval
- Unlimited funding potential
Factor Finders can get your construction company the funding you need – with no added debt. Not to mention, factoring your construction invoices helps build your credit because you have the working capital to take on more customers, bid on larger construction jobs, and pay your supplies with ease.
Funding for Any Type of Construction Business
Here at Factor Finders, 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.
We can provide funding for a wide variety of construction projects:
- Site Clean-up
Ready to Get Paid Faster?
We’ll use the information you provide to match you with a factoring company that specializes in construction – no matter the project. We’ll work with you to find the best factoring company within our network that fits your needs.
Let Factor Finders do the work for you.
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