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Construction Factoring

Factoring, for the construction industry, is a great way to help with cash flow. Invoice factoring is widely used in construction, with many companies releasing the money tied up in unpaid customer debts in order to get cash flowing through their business. This is true for all business sectors which use factoring, but how is this applicable to the construction industry in particular?

In the construction industry, for both contractors and subcontractors, receiving payment on time is rare. After a job is complete, it’s common to wait for weeks before debts are cleared, creating a gap in cash flow that can be harmful for many businesses. For subcontractors, waiting for the main contractor to get paid first also lengthens the process, as there’s no guarantee the contractor will pay you as soon as possible either.

This can all mean you struggle to cover your wage bills or are unable to take on new work. Expansion plans could also be affected as you won’t have the cash flow to bank roll them. If you’re working on one large job, this can take up all of your cash flow and mean that you can’t take on new jobs or purchase new materials. By factoring the invoices from your construction jobs, you’ll release the cash flow to pay bills, qualify for early payment discounts and even expand your business.

Factoring and invoice discounting lets construction businesses release the cash tied up in invoices that could otherwise drag on and take months to be paid. With the construction industry suffering from the effects of the economic downturn, factoring can help to reinvigorate businesses and make it easier for them to grow and expand even when the double dip recession is casting shadows over their prospects.

 

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