Is Construction Invoice Factoring the Right Choice for Your Business?

Is Construction Invoice Factoring the Right Choice for Your Business?

Due to the significant costs of taking on projects in the construction industry, many companies require additional financing to be able to maintain strong cash flow and start new work. Construction factoring allows you to access the funding you need based on your outstanding accounts receivable. To determine if it is the right choice for your business here is some more information.

The Benefits of Construction Factoring

Construction companies face numerous expenses such as rent, utilities, employee salaries, equipment, marketing, insurance, and legal fees. Besides these, you may have to hire additional help to expedite the completion of projects, shift locations for particular jobs, and handle emergencies such as the breakdown of machinery and economic downturns. Factoring your construction invoices provides you with immediate cash to meet these financial needs.

Construction Factoring Eligibility

If you are an independent contractor or own a construction company specializing in building, paving, roofing, landscaping, utilities, or site clean-up, and you offer clients terms of 15 to 90 days or more, you can qualify for construction factoring. This type of funding is ideal for businesses that are unable to obtain traditional loans. Also, those who need urgent financing cannot wait for the tediously lengthy process of acquiring a loan.

Construction Factoring Process

Construction factoring involves selling your unpaid accounts receivable to a financing company. The first step is to conduct research and find a factoring company with rates and conditions that meet your requirements. Upon application approval, you will sign a factoring agreement. You then receive an advance of 80 to 90 percent of the value of the invoices you have factored in. When your clients pay what they owe to the factor, you are sent the balance due after the factoring company takes out its fee.

For more advice on construction factoring as a funding solution for your business, get in touch with Green Apple Funding.