One advantage of owning a cellular tower erection and maintenance company is that you have reliable clients. Because most carriers and tower operators have great commercial credit, pay invoices on time, and often provide long-term tower upgrade and maintenance contracts, they make a great client base.
One problem, however, is that they often ask for 30- to 60-day payment terms, which can affect small and growing companies.
Payment terms create financial problems
The problem with offering payment terms to allow clients to pay in up to 8 weeks is that most small companies can’t afford them. Small companies need to get paid sooner to meet their own expenses.
Cell tower construction and maintenance companies have numerous immediate costs for materials, equipment, and labor — yet few have the financial resources to wait for payment. This problem worsens if your company is growing, as it can force you to turn away projects simply because you can’t afford to take on the client. Or worse, it could force you to miss payments to critical suppliers or employees.
The solution: invoice factoring
Cash flow problems are common with growing tower maintenance companies, especially those in business for only a few years. However, if your main problem is that clients are paying slowly, you can solve this problems easily by factoring your invoices.
Invoice factoring provides financing for your slow-paying receivables from creditworthy clients such as wireless carriers and cell tower operators. Your company gets immediate funds to pay for business expenses like equipment, supplies, and labor. Invoice factoring allows you to focus on growing your business rather than on chasing payments. To learn more, please read “What is factoring?”
A connection to growth
Invoice factoring can help if you have been unable to grow your tower maintenance company because you were not able to offer terms to your clients. This problem is common for start ups and new companies that are not well capitalized. With invoice factoring in place, offering terms isn’t a problem any more.
What’s more, the factoring line is flexible and can increase as your revenues grow, making invoice factoring a great option for companies on a path to growth.
How does a transaction work?
Invoice factoring is simple to use and can integrate well with most companies. The receivables factoring company funds your invoice in two installments. The first installment covers up to 80% of the gross value of the invoice and is wired to your account as soon as the work, or project segment, is completed.
The second installment settles the transaction, covers the remaining 20%, less the financing fees, and is wired to your account after your client pays the invoice in full.
Keep in mind that invoice factoring can be used to finance an invoice for completed work only. Consequently, it can’t be used as a source of mobilization capital.
Can invoice factoring help your company?
Invoice factoring is right for your business if all of the following apply:
- Your chief problem is that your clients are paying slowly
- Your clients are creditworthy
- Your gross margins are sufficient to cover the cost of financing.
Invoice factoring is a great solution for cellular tower construction and maintenance companies that need financing due to slow-paying clients.
Get more information
We are a leading factoring company and work with cellular tower maintenance companies. For information, get an online quote or call (877) 300 3258.