Many people are starting construction projects to build their homes and commercial premises. As a professional in the construction business, such individuals are likely to hire you and your company for such projects. Construction factoring is a concept that allows you to have adequate cash-at-hand as you serve your clients by obtaining cash advances for your invoices. It involves selling some or all of the unpaid invoices to another party called a factor. Nevertheless, you must understand how this concept works and its benefits to your business.
Benefits of Construction Factoring
In the construction industry, factoring your invoices can work pretty the same as in any other business while still proving to be simpler than acquiring a bank loan. Here are some of the most popular benefits that factoring can have on your company.
The two main costs you incur when factoring your invoices are the discount you give for the invoices and the fees that the factor charges you. In most cases, these costs are much less than a bank loan’s Annual Percentage Rate.
No Limit to the Money You Can Get
The amount of money you receive from factoring depends solely on how many invoices you have successfully sold to the factor. This is unlike in banks, where the amount of loan you get depends on your credit score, how much profit your business makes, and other factors. Selling several invoices at a go can help you get more money with factoring.
Easier and Faster Approval
When you sell your invoices to a factor, you are only dealing with a single individual who can approve your loan in days and not weeks, as it happens with bank loans. Do not worry if you have bad credit or have filed for bankruptcy: your client’s good credit score and exemplary payment records can help you secure financing through unpaid invoices.
No Restrictions on the Money Usage
You are not restricted on how you use the money you get from construction factoring. Feel free to use the money for cash flow, paying the employees, buying inventory, among other purposes.
Having a construction company is a lucrative opportunity, but it cannot smoothly run if you don’t have constant payments from your clients. Construction factoring is a viable option, which allows you to sell the unpaid invoices and get money from a factor. If you feel this concept is difficult for you, then contact Navigate Firm today and get all the financial help to keep your business going.