The construction industry has a consistent history of recovering after economic downfall; however, the effects are felt all throughout individual businesses. Construction factoring is a great option for increasing cash flow within your business without applying for a loan. Here are some of the advantages of construction factoring.
Faster and Easier.
Getting approved and receiving the money after approval can take weeks or months with traditional lending methods. As long as your clients have good credit or good payment records, approval won’t be contingent on your business or personal credit information.
The amount of money you received is based on the invoice amount, not a credit limit. The higher the invoice amount, the more cash you’ll receive.
With construction factoring, you get to use the money as you see fit whether that’s operations cost, payroll, or other business investments. You are free to choose how you spend the money even if that includes building capital reserves to roll out growth plans at a future date.
Construction factoring is oftentimes much cheaper than the APR of a business loan. With construction factoring, you pay the discounted rate of what you sell your invoices for plus any fees the factoring company charges.
When choosing a factoring company, make sure you work with someone who specializes in construction and construction factoring. They should understand the complexity of the industry as well as contractual restrictions (e.g., “paid if paid” or “paid when paid”) and allow accommodations for circumstantial events such as retainage payments. Experienced construction factoring companies should be able to suggest what type of factoring—recourse or non-recourse— would best benefit your business as well as offer options that are relevant to your needs.
Contact Capital Crown Investments for additional information on how construction factoring can benefit you and your company.