Construction Factoring

Smaller construction firms often find themselves plagued by cash flow issues. Clients expect the work to be completed and delivered prior to being billed, so any unavoidable delays in finishing a project can come at a high cost to the firm.

With expected payment terms from contractors and clients ranging from 30 to 90 days, many firms find it difficult to manage cash flow.

Attempts to float cash to pay employees and purchase supplies may also force additional constraints on a company’s finances, preventing them from taking on additional work and maximizing revenue.

Many small businesses don’t have the liquid capital to cover expenses associated with purchasing supplies and paying for labor up front, while allowing their clients flexible payment terms (net-30, net-60). Furthermore when a larger client doesn’t pay their invoices on time, other projects may have to be delayed until the capital is freed up, or worse the company finds its growth is limited and potential revenue is lost. However, most clients are unable, or don’t expect to pay for work prior to the project being completed. This means that construction firms need to have immediate and scalable ways of getting access to capital or they won’t be able to get new clients.
Invoice factoring is a great tool for companies to take on additional work, offset lengthy payment terms, and continue growing the business – and unlike financing, factoring loans are fast and easy to obtain!
For more information or a quote, apply online or call us toll-free at 1.888.893.6828 .

Factoring may be the answer

To get through situations where money is tight and the stakes are high, having fast, easy access to capital can make a significant difference. For this reason, many contractors partner with a factor that knows their industry. Factoring your invoices allows a company to receive immediate payment on completed invoices, or partial payment on signed, uncompleted contracts. The process is fast and easy, doesn’t require a credit check and even limits liability by preventing the company from becoming indebted or encumbering assets.
Download our factoring guide here and find out what you need to know about factoring.

Businesses that are limited by slow-paying clients are great candidates for invoice factoring. This easy-to-access type of financing is not contingent on credit approval, and offers nearly immediate access to any unpaid invoices.


Use it to help you grow

The majority of construction work is subject to external events such as weather and supplier delays, city planning and zoning approvals. As a result, contractors and subcontractors often find themselves waiting on payment from a variety of contracts in the early summer months. Until the invoiced amounts are paid, the money can’t be use to take on more work. Invoice factoring allows nearly immediate access to funds, allowing companies to take on additional jobs and complete more work during the busy months – thereby driving additional revenue.

Factoring current invoices or customer contracts can provide fast access to working capital. This will allow you to buy new equipment and additional supplies – which are essential to expanding operations and growing the business.

Invoice factoring can help you:

  • Increase working capital to cover payroll and expenses
  • Expand employee base to take on additional jobs
  • Purchase supplies in bulk from suppliers at discounted rates
  • Purchase new equipment to offer additional services

Invoice payment process

The first installment usually occurs when the buyer (factor) accepts the contract, and is paid at approximately 80% of the invoiced amount. The second installment is paid when the invoice itself is paid in full. The cost of factoring varies based on the amount of the invoice, and the industry of the client (it can be as little as 2% and as high as 8%).

Companies that can benefit from our services include:

  • Directional boring
  • Utility construction
  • Landscaping companies
  • Roofing
  • Flooring
  • Drywall installers
  • Demolition
  • Lumber distributors
  • Commercial builders
  • Paving companies
  • Subcontractors – Tile, Plumbing, Roofing
  • Construction staffing
  • And more…

Do you qualify?

Invoice factoring is usually a good fit for those in the Construction sector, and qualifying is relatively simple. The most important thing to assess before deciding to factor is the likelihood of the invoices actually getting paid. The invoice itself is used to secure the transaction, so clients that do not pay their invoices on time can cause problems for your factor, and cause your rates to go up. Aside from that, it is important to be aware of your legal standings as well. If your company has any legal or tax problems, it is important to disclose that to your financing partner as soon as possible.

Get a strategic advantage

Invoice factoring can provide a strategic advantage for a bootstrapped company, especially if their growth has been limited by tight cash flow. Unlike most financial solutions, which have a fixed amount, the amount that you can factor is completely contingent on your accounts receivable.
Download our factoring guide here and find out what you need to know about factoring.

FIND OUT IF IT’S RIGHT FOR YOU

Ultegra Business has been helping those in the construction industry get fast and easy access to working capital since 2004. We understand the industry, and our business consultants have helped hundreds of companies get the capital they need. Our unique underwriting process has enabled us to offer loan approvals for more than 90% of our applicants, many of which have been turned down by traditional banks. For more information or a quote, apply online or call us toll-free at 1.888.893.6828 to speak with one of our Loan Analysts today.