Construction Factoring – The Best Option?
Construction Factoring is put forwards to construction contractors as a specialist product designed for their benefit. This in part may be true, but in reality the product is designed to manage risk and is for the benefit of the lender rather than the client. It can be expensive, hard to run and restrictive in terms of cash generation.
In many cases there may be a far more costs effective solution that is easier to operate and generates more cash. Speak with us on 0845 251 4040.
What are the potential issues with construction factoring?
– it can be very expensive when compared to more traditional types of working capital facilities.
– specialist lenders can insist on the involvement of their quantity surveyors. This can make the facility expensive but it can also be frustrating having each of your contracts scrutinised. It can feel as though they are telling you how to run your business.
– specialist construction finance products can create a lot of restrictions which make it hard to to predict how much cash the facility will generate. This can make it hard for businesses to budget and forecast.
As a construction contractor what other options are open to you?
– it is fair to say that the invoice finance industry has certain lenders that are happy to run facilities in a traditional manner.
– this means that you can raise funding against outstanding applications without the frustrations of QS involvement, restrictive covenants and high fees.
– less involvement from the lender typically means a less cumbersome facility that is cheaper and easier to operate.
Not all lenders in the invoice finance industry will consider funding the construction sector.
If you are a construction contractor looking for a cash flow solution speak with us about your options on 0845 251 4040. We have a long track record of assisting construction contractors with invoice finance solutions.