Capital is needed for any successful business, including construction. However, when your company relies on paid invoices for capital, it can be hard to manage business needs with lots of outstanding invoices. Fortunately, construction invoice factoring can be available for organizations that need capital while they wait for clients to pay.

Construction Invoice Factoring

Invoice factoring is a way to get financing for your organization. The process uses your outstanding receivables to provide a cash advance. This is a way to expedite cash flow to your organization rather than having to wait for customers to pay outstanding invoices. Construction invoice factoring can be effective for any construction organization. It is especially beneficial for companies that may not qualify for other types of loans. Also, for those who need funding faster than what is offered through traditional loans and financing.

How Construction Invoice Factoring Works

In simplest terms, invoice factoring sells your outstanding invoices to a third-party organization that provides you funding based on the balances outstanding (minus their fees). The factoring company takes over the process of collecting the outstanding balance. The amount of funding you receive is based on several factors. Including the length of time of the outstanding balances, the amount in the balances, and other financial considerations related to your organization. Upon approval, the company provides the terms for the invoice factoring. Which includes the fees that are deducted by the factoring company.

Ways Construction Invoice Factoring Can Help

Construction invoice factoring provides capital for a company to navigate unexpected finances. Along with regular expenses, such as payroll, equipment, and hiring new staff. Factoring can help prepare for challenges faced by construction companies. Some of these challenges include:

• Legal expenses due to workplace accidents 

• Overtime pay 

• Sudden loss of a project 

• Managing slow-to-pay clients 

• Unexpected equipment losses or problems  

Whether you have an unexpected expense or simply need financing to continue operations, construction invoice factoring can help. By providing financing based on outstanding invoices, you can get the money you need from the work you’ve already done, so your organization can continue to be successful.

Contact Rexford Commercial Capital for more on commercial financing solutions that you can trust.