Factoring for the Construction Industry
Whether you need a specialized machine for a new line of services or an entire fleet to get your company off the ground, construction equipment requires a serious financial investment. Many businesses in the industry fail to get off the ground because of the steep upfront costs of equipment. After the initial investment, discover how factoring can improve your cash flow and give you the resources you need to compete in the construction industry.
Factoring allows you to receive fast payments for your invoices. When you complete a project in the construction industry, you typically need to wait for 30, 60 or even 90 days before receiving payment. Don’t drain all your resources on a single project, but utilize flexible financing for the capital you need.
Of course, you won’t receive the entire invoice when you factor. A factoring contract typically pays between 70% and 90% of your total invoice. This may change depending on the terms, conditions and payment periods, so be sure to review each contract before choosing to use a factor. After the initial payment, you won’t have to worry about interest rates, monthly payments or any other issues that affect lenders.
Unlike other industries, construction requires specific factoring. Contracts are often more complicated and include strict terms, progress payments, liens, and retainage to help ensure payment is fair and the job is completed. Choose a factor that understands the unique financial challenges faced in the construction industry in order to receive payment quickly and hassle-free.
Construction also includes massive spending. It’s typical for a construction contractor to invest large amounts of their working capital into a single job and work with strict cash flow until the project is complete.
Not only can you use factoring to keep on top of construction equipment costs, but you can also use it to bid on large jobs. Because you’ll receive your payment in as little as 24 hours, you can be confident investing much of your capital into one major project. Don’t be afraid to compete with larger companies in your industry, but offer your premium services to projects of all sizes.
From minor jobs to major construction projects, find out today if factoring is right for you. Keep your construction equipment running and make your payments on time with the help of factoring. Because of the flexibility of your factoring contract, you can easily choose which projects you’ll factor and which ones you can afford to wait for the entire payment to be processed.