Factoring Applications for Payment
As a construction contractor you may want to look at factoring applications for payment. While traditional invoice finance providers may not be able to assist the good news is that there are specialist providers that can provide cash flow finance secured against your applications for payment.
If you would like to discuss your options in person please call Funding Solutions on 0845 251 4040.
Let’s take a look at your options. However, it is important to understand whether you are looking to factor certified or uncertified applications for payment.
Whole Turnover Factoring
There are now 3 companies that will look at factoring applications for payment. They do require the whole turnover to be notified. The prepayments on offer range from 40 – 60% of the net value of the application. They can be lower depending on what sector of the construction industry you are operating in. There are options for both certified and uncertified application however if your applications are certified it would be fair to say that more options exist for the finance.
Spot Factoring or Single Invoice Factoring
This is where you factor a single invoice or application. At present most people that provide this service do require the applications to be certified and prepayments range from 45 – 65%. This can be a good short term solution for construction contractors that require access to cash on an ad hoc basis. However, as a long term solution where you need to factor most of your invoices/applications most of the time it can prove very expensive as the interest rates are high. However, it does mean you can just factor the applications you want to and can dip in and out of the facility. There are also no contracts or minimum fees so as a short term solution spot factoring for applications for payment can be the most cost effective solution.
How Can Funding Solutions Help?
At Funding Solutions we have an excellent understanding of the construction industry, with one of our directors having been the Finance Director at a construction company for over 20 years. This coupled with our in depth understanding of the invoice finance market means we are well placed to advise any construction contractor on how best to raise working capital against outstanding applications for payment.
For more information on how Funding Solutions can help your business please contact us on 0845 251 4040 or complete our free invoice finance quote form.