How Can a Small Construction Company Benefit from Invoice Factoring?

When your construction company needs to boost its working capital to provide sufficient cash flow to take advantage of various circumstances, construction invoice factoring may become your best option compared to using the slow process of asking your bank for money.

Using an Expert Factoring Company

The process of asking your bank for a loan is tiresome, cumbersome and may result in a refusal. The procedure may take from a few days to several weeks.

Even with a successful bank loan, the cost of repaying the debt may become unwieldy and stop you from enjoying an ever-increasing cash flow.

By partnering with a factoring company who is an expert in your industry, you may be able to achieve an advance of your necessary funds within 24 hours using construction invoice factoring.

The advantage of using experts who understand your industry is that they are better placed to understand your customers and how the construction industry works.

Some factoring companies may consider construction to be extremely risky and will refuse to factor in the circumstances. Your industry expert will understand the risks associated to construction invoice factoring and understand which can be overcome to help ensure your cash flow.

When you are working with a factoring company for the first time, there will be an approval process, and this may take a few days.

The factoring company will be assessing the quality of the companies that you are invoicing. They are checking the risk of taking your invoices and paying the funds to you before collecting the invoice funds from your customer.

You will expect to pay a discount or a fee to the factoring company, and that is how they make their profit. You, nevertheless, will receive most of your invoice funds within a short period enabling you to complete deals because you have a positive cash flow.

With a bank loan or overdraft, the interest rates are prohibitive and will reduce your cash flow rapidly.

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