![]() Unrealistic deadlines - Some clients will ask for highly optimistic deadlines. No job is guaranteed - The construction is competitive and an industry where clients will potentially jump to another contractor if they provide a better deal. Paying overtime hours - When projects grow bigger than their original scope, you’ll need some extra cash to support overtime pay for workers. Even if you obey all applicable laws and take all possible safety precautions, you could still become the target of a lawsuit. Threat of getting sued - In the construction field, there is always the possibility of workers or even pedestrians getting hurt or near the construction site. On top of all that, construction businesses also need to have extra capital to be prepared for situations like these: Marketing expenses, for attracting new clients Hiring new employees to complete jobs faster, or take on more jobsĮxpanding to a new location to serve more new clients For example, you might use your extra funds for things like: Getting certified and keeping your certifications up to date each year can cost hundreds of dollars.Īside from these day to day concerns, savvy business owners often find that having some extra cash can help them stay ahead of the competition by funding faster business growth. For example, in the state of California, all contractors must be licensed by the California Contractors State License Board in order to bid on large projects. Utilities & rent, to keep your office comfortable and your lights on.įees for maintaining locally mandated certifications. Legal fees, for assistance with business documents and contracts. ![]() Sales and Marketing, for growing your business and keeping a steady stream of projects in your pipeline. Office space, furniture, maintenance and renovationsīusiness insurance, to protect you in the case of accidents or disputes. Payroll, for hanging on to your employees.Įquipment, tools and supplies, to keep work going in the office and in the field. Why would construction companies need cash flow in the first place? Like any other business, construction businesses have operation costs of their own that usually non-negotiable, such as: Funding Challenges Construction Companies Face ![]() If your company is faced with immediate expenses to cover and has a lot of high volume incoming invoices, then construction invoice factoring might make sense for you. Whether your specialty is landscaping, roofing, paving, site clean-up, or utilities, any contracting company that issues invoices with net terms between 15 to 90 days is eligible for invoice factoring.Ĭonstruction invoice factoring is also ideal for companies who may not qualify for other types of loans, or companies in need of funds faster than possible with a loan. Invoice factoring is suitable for any type of construction company or independent contractor. Invoice factoring ensures that construction companies will be paid sooner instead of having to wait for customers to pay their invoices after the next milestone, or after project completion. With invoice factoring, construction companies are able to expedite cash flow, so they can begin the next phase in their projects or start a new project entirely. Once approved for construction invoice factoring, your construction company get access to funds, typically within a few business days, for outstanding invoices. ![]() Invoice factoring is a cash advance for your outstanding receivables. As a result, many construction companies rely on construction invoice factoring to obtain the cash necessary to perform day-to-day operations. Of course, no business can stay afloat without cash reserves for long. If the job lasts multiple weeks, your construction company can sometimes run dangerously low on funds, or even be without operating capital for months, depending on how many concurrent projects and invoices you have. This means you front large amounts of cash for the job costs until the work is completed, which could be months, or even years. Regardless of what type of construction you specialize in, whether it is flooring, demolition, electrical, roofing, HVAC, or something else, you know that every type of construction project involves estimating, budgeting, purchasing materials and equipment, and hiring skilled labor.Įspecially for larger, more expensive projects, clients may sign an agreement, but won’t expect to pay for the entire job up front. If you work in the construction industry or run a small contracting business, these issues probably come up often. Under-estimated projects and over-budget jobs.buying expensive materials weeks before sending an invoice.permitting delays… Sound familiar? Construction Invoice Factoring & Construction Receivables Factoring
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