We are a Full-Service Business Financing Firm that with Consultants
that Specializes in Construction Factoring
What is Construction Factoring?
Construction Factoring is an Invoice Financing funded by lenders to either a Large Commercial Construction or Commercial Subcontractor companies with credit approved Commercial Construction clients.
With this Invoice Financing product, the lenders purchase the companies outstanding Commercial Construction Invoices for completed and approved work minus any retainage and change orders. This allows the lenders to advance these businesses up to 85% of their invoice full face value upfront.
This provides instant liquidity to the businesses by utilizing the business’s own assets their accounts receivables without taking on additional debt as Construction Factoring is not a loan. Once the Commercial Construction client pays the lender the full invoice value either within the next net 30 to up to net 60 business days.
Then the lender will remit to the business the balance of the value of the invoice minus the cost of capital fees. Considering that most large Commercial Construction clients pay on invoice terms that range from net 30 to up to net 90 business days.
Commercial Construction companies or Commercial SubContractors that service the industry have to juggle their cash flow between the day to day expenses of running their business with the infrequent payment schedule of their clients.
For businesses that need access to their capital quicker to manage their overall budgets or for businesses that want access to their capital ahead of schedule to take on additional jobs. Construction Factoring can be a great option for businesses to quickly obtain working capital and redirect those funds as they see fit within their companies.
Since Construction Factoring can be utilized across many aspects of the Construction Industry and the length of time most Commercial Clients can take to pay invoices companies the most common users of this product include but not limited to:
- Utility Construction Companies
- Commercial Construction Companies
- Landscaping Business
- Commercial SubContractors like:
- Commercial Roofing SubContractors
- CommercialDrywall Installation SubContractors
- CommercialDemolition and Excavation SubContractors
- Commercial steel and Rebar Installation SubContractors
- CommercialPost Construction Cleanup SubContractors
- Commercial Light and Heavy Industrial Construction Staffing SubContractors
- Commercial Plumbing Subcontractors
Considering Construction Factoring requires the lender to purchase the invoices and thus collect directly upon the debt from the Commercial Construction client. This Invoice Financing product works best for Large Scale Commercial Construction Companies and Commercial SubContractors comfortable with turning over that aspect of their collections process.
Construction Factoring works in two stages: the Advance stage and the Rebate stage.
Once either a Commercial Construction company or Commercial SubContractor has completed work and their Commercial Construction client produces an invoice for completed work.
A lender will purchase creditworthy verified approved invoices minus any change orders or retainage and factor the businesses open invoice and advance capital of up to 85% of the invoices full face value. This portion is considered the advanced stage which opens up an invoice transaction.
Typically the business will receive the working capital advance against their invoices value within less than 24 hours and in some cases same day funding is available. The customer pays the invoice amount to the factoring company at the terms you previously agreed upon.
Once paid in full, the discounted amount is returned, less a minimal factoring fee for services provided. This portion of the process is called the rebate stated and closes out the invoice transaction.
Commercial Construction Companies and Commercial SubContractors are benefiting from this Invoice Financing product by utilizing it to unlock their own capital trapped within their lengthy customer invoices. If Companies involved in the Commercial Construction Industry can build such amazing buildings from scratch I think it is safe to assume they would know how to redirect capital that may equal up to 85% of their invoices face value into the best areas to run and expand their businesses.
Being able to tap into their Commercial Construction Invoice as early as the next day after they were issued instead of having to wait anywhere from a net 30 to up to net 90 business days
Construction Factoring Allows Commercial Construction-related companies to create better cash flow by utilizing their own asset their Commercial receivables
This Invoice Financing product unlocks liquidity without taking on additional debt as this is simply an advance against the companies own invoices
Construction Factoring Allows Commercial Construction companies to offer existing customers longer payment terms and take on new customers that want to pay on net 30-day terms or longer with ease and confidence
This can be an easy qualification process and once approved businesses can submit invoices and receive capital as quickly as the same day to within 24 hours of submitting an approved invoice.
Construction Factoring allows companies to use their freed-up capital to either take on additional jobs at once time or to simply not turn business away because the business is lacking working capital
Construction Factoring lenders work best with either Large Scale Commercial Construction Companies with credit approved Commercial Clients or Commercial SubContractors working under credit approved General Contractors.
This Invoice Financing product works best for Commercial Construction Receivables that are paid typically within net 60 business days.
Commercial SubContractors will not be approved if the company has a bond for a project their Credit Approved Gen Contractor must be bonded
Only Commercial Construction Invoices Receivables that are free of liens are eligible for this program.
In order to qualify for this asset-based lending product the business must not have major legal or tax liens
Considering only Large credit approved Commercial Construction client invoices are eligible for this invoice financing product companies to need a minimum of 2 years of experience in the construction industry.
The following are a list of documents lenders typically require businesses provide in order to be approved for Construction Factoring:
- Proof of Corporate documents
- Business Bank Statements
Corporate or Personal Tax Returns
- Corporate or Personal Financial statements
- Current Credit Approved Aging of Accounts Receivables Invoice Summary
- Current Aging of Accounts Payable Summary
- Copies of any UCC filings if the business has already assigned the Accounts Receivable Invoices to another secured party or lender.
and redirect those funds as they see fit within their companies.
Available Capital Limit
Up to $100M per Invoice
Standard Interest Rates or Cost
Rates Starting at 1.5% for the 1st 30 Days
Typical Underwriting TimeLine
5-10 Business days
Average Term Limits
12 to 24 Month Terms
In closing, The Construction industry is a major contributor to the U.S. economy. The industry has over 650,000 businesses that operate the space and generates over $1 trillion worth of structures every year.
The industry is growing year over year and companies that want to capitalize and capture market share need liquidity and working capital. Construction Factoring can ease the burden caused by lengthy terms Commercial Construction clients typically take to pay on.
Our team of seasoned consultants here at Troy Business Group could provide either a Commercial Construction company or Commercial SubContractor with some of the best Construction Factoring programs in the industry. This solution can provide companies with immediate funds to put back into the business and take on additional projects.
Please apply online, email us for an appointment, or call us today. Our team is committed to helping your business grow with Government Contract Financing and will guide you through the loan process each step of the way.