Cash Flow Finance for Construction – Challenges and Solutions

 

construction-finance

 

Construction contractors are caught in a triangle of despair when it comes to cash flow. They are often paying wages weekly, raising monthly applications for payment which are paid on extended terms and finance is not readily available. This can cause cash flow problems that can restrict growth or at worst threaten business survival. Transactions are hard to finance because of the risks involved in collecting outstanding sums if a business fails. By the nature of the contracts, the work is likely to be part finished if they fail and the main contractors will be forced to find another supplier to complete the work. They have the right to implement ‘liquidated damages’ clauses if they are within the contract and, as such, rarely pay.

For this reason, construction companies need to consider their options carefully. While cash flow funding for construction companies may be hard to find they are out there and the challenge is finding the right one.


This therefore presents the construction industry with three key challenges when trying to source cash flow solutions:

1. The banks don’t want to assist by offering overdrafts or loans.

2. Traditional invoice finance lenders do not want to fund against applications for payment, stage billing and contractual debt where liquidated damages clauses exist.

3. Some of the specialist funding available is expensive, hard to administer and does not always deliver on its promise.


At Funding Solutions, we offer the following solutions for construction contractors:

Invoice Discounting: a fully confidential facility offering up to 80% prepayment against uncertified applications for payment of invoices.

Factoring: this is offered on a confidential or disclosed basis and can offer up to 80% prepayment against uncertified applications or invoices; typically, this includes a credit control service.

Spot Finance: you choose which invoices to fund on an individual, ad hoc basis.

Unsecured Loans: we can also offer unsecured loans on attractive terms.

 

If you need a cash flow solution, we will explain the ‘pros and cons’ of the different options so that you can make an informed decision. Importantly, there is no ‘hard sell’.

To find out more please call us on 0845 251 4040 / 07789 638 178 or email: finance@fundingsolutions.co.uk