Construction factoring helps subcontractors finance invoices from commercial clients, general contractors (GCs). It provides working capital for payroll, suppliers, and other expenses.
We offer competitive terms to subcontractors that invoice at least $50,000 per month. Our programs have simple qualification requirements and can be set up quickly.
Bottom line
Already know everything about factoring and just want to know the bottom line? Here it is:
Is construction factoring for you?
Our construction factoring program is designed for subcontractors with ongoing working capital needs. Our program is generally a good fit for companies that meet the following criteria:
How does construction factoring work?
Construction factoring is simple to use. You submit eligible invoices and receive the advance up front. Once your customer pays, the remaining balance is released, less our fee. Here are the steps:
Competitive advances
A high advance is an essential component of a construction factoring program. It provides the upfront working capital injection that helps improve your company’s cash flow.
We provide competitive advances from 75% to 85% to qualified subcontractors. The advance rate varies based on the transaction’s risk profile.
Program benefits
A construction receivables factoring program provides you with several benefits. These include:
Types of subcontractors we finance
Companies that can benefit from our services include:
Important considerations
Construction factoring programs differ from conventional factoring in three important ways. These differences are typical of construction factoring programs across the industry. We explain them upfront so you can make an informed decision.
a) Pay-when-paid
Construction invoices are often subject to a “pay-when-paid” clause. This clause enables the GC to pay you only after the client pays them. These invoices can’t be financed unless the GC is willing to waive this clause. Otherwise, you will have limited recourse if the GC defaults on an invoice due to a client’s non-payment.
b) 10% retention
Construction-related invoices are often subject to a 10% retainage, which is paid only at project completion. Retention invoices can’t be factored because they are typically open for more than 90 days and have a higher risk of being disputed.
c) Detailed verifications
Factoring companies regularly verify invoices to ensure they are accurate. Some construction-related invoices may require more detailed verification, especially if associated with a progress payment.
Useful reading
We have 20 years of experience and have developed a comprehensive learning center. Here are some useful articles: