Many construction subcontractors have difficulty finding funding to support their business needs and maintain a healthy cash flow. Some subcontractors have been able to improve their situations by diversifying their portfolio, working with both commercial companies and general contractors. Others have found relief through construction factoring.
Commercial customers and general contractors can take up to 60 days to pay their invoices and while they wait, you still have bills and employees to pay. Construction factoring allows subcontractors to receive cash immediately into their business by leveraging their invoices with a financing company.
Construction factoring is very simple to do and when done correctly can completely eliminate shortages in cash flow. To get started you would partner with a finance company that specializes in construction factoring. You would then choose which invoices you would like to leverage and present them to the company. The company will provide you with around 70% of the value of the invoice up front and will deliver the remaining, minus their fee, upon payment from the client.
Because construction factoring is based on the value of your invoices, factoring companies very rarely check the company’s credit. Approval is based heavily on your business’s history and your client’s ability to pay. Construction factoring provides a quick, debt free, and efficient way to gain access to financing for your business.
Due to the complexities of the construction industry, it is important to make sure you partner with a financing company that specializes in construction factoring. Understanding the jargon within the industry is crucial to building a successful relationship and understanding the terms of your agreement. The right construction factoring company will be able to explain all of the fine details and costs of the contract in a way that you can understand.
Contact Progressive Capital Funding to get started today.