Simple & Reliable
Simple & Reliable
Construction Factoring is the process through which a company sells its invoices to a third party at a discount, which is also called factor. The organization or company need to take such step to satisfy their financial crises in case their invoices are not cleared by their clients. The third part give some financial help on the basis of these invoices to be cleared soon.
Factoring is of many types relating to the business it is used for. Construction is a type of business where a continuous flow of capital is required. Sometimes the companies are not able to fulfill those needs, so they take help of the third party so, for this construction factoring is used.
Construction Factoring provides a solution to the businesses to deal with and face challenges of regular capital demand. In construction business, mostly the client takes some time to clear the invoices, and in this due phase of time sometimes the companies suffer from cash shortage. But due to pending invoices company cannot be shut down. In such situations, invoice factoring plays a dominant role in helping these companies to deal up with the situations.
Also due to the lack of resources in that specific phase of time, you cannot decline to accept new and larger projects. Factoring provides financial support to take your construction business further. You can take the assistance of construction factoring companies to pay the salaries of the employee, also can wrap up the extra cost and buy required instruments for the company.
Construction invoice factoring will maintain the balance of the unpaid amount. It will enable your company to advance and come up with a boost to complete bigger deals. As a leading construction factoring company, we deal with every kind of Construction Company, whether it is small, big, or contract-based.
It does not matter how much time you are in the market for, or you have just started a construction company. We are always there to assist you with best possible services and will provide you on spot capital.
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How Does The Process Of Construction Factoring Go On?
The construction factoring process is very easy and simple for many construction companies. We provide fund in two ways: earlier and refund.
In the Earlier factoring, payment is done as soon as you apply for funding of invoice. The early or advanced payment generally covers over 65 to 75% of the amount of the invoice that is submitted or may depend on any other factors. The finance paid very sooner through check or directly transferred to your relevant account.
The refund amount is transferred to your account as soon as when your invoice costumers pay it on their initial time of payment. The refund amount is the rest 35 to 25 % of earlier payment, with automatically cutting down the factoring fees.
Benefits Of Construction Factoring
- Do not have to wait for the invoice to complete their payments
- Fast capital supply
- Permit you to get in at least 30 days from the customer.
- You will have no complications related to insufficient capital.
- The process goes on without any hassle.
Disadvantages Of Construction Factoring
Construction factoring has some in an aspect of benefits, on the other hand, have downsides too
The construction factoring company can put the amount of fees according to themselves. This can vary from 1 to 5 percent of the overall invoice amount.
You will not have further interaction with your clients
As now the factoring company is in charge so they will interact with the customers and you will lose all the connection with them. This can create an impact on future businesses.
Finance will depend on the clients
The factoring company will provide you funding based on the number of client in your invoice list.
The construction factoring company sometimes is not responsible for having paid for the unpaid invoices. This may take you to a delay in the payment received.
How The Construction Factoring Companies Buy You Invoices?
Companies bought up their invoice to factoring companies to have a continuous supply of capital. You can find a number of factoring companies for the construction industry. Following are the steps that a company follows while purchasing invoices:
- File the invoice for which you want factoring
- The advanced payment is made by the companies as soon as you are qualified. The advance is generally 70 to 80% of the total invoice.
- You customer can make the payment in 1 to 2 months.
- After the customer pays for the invoice, the rest amount will be paid by the factoring company to you.
Construction Factoring Rates
The company generally provides construction factoring rates. Here we have come up with the basic rates of the factoring a good company will provide you. It will depend on the regular payment of the clients. While choosing a factoring company always keep in mind the rates they provide are feasible for you.
Time Period Of Payment – Factoring Company Rate
List Of Best Factoring Companies
- Blue vine
- Construction Financial
- Factor Funding company
- Capital Plus
- Working Capital of America
- Paragon Financial
Criteria For Selecting Best Construction Factory Companies
Before going to choose a construction factory company, we always keep in mind what the capital lender can obtain profit. You should consider the advance rates provided by the company, all the necessary documents, and accomplishment for availing the benefits.
Here we have come up with criteria that you should consider while selecting the best factoring company for you:
- Total cost- it the price that is going to be demanded by the factoring company, and also some companies provide discounts on the invoice.
- The amount charged by the factoring company- it is the overall amount that a factoring company provides you after calculating the total cost of the construction.
- Earlier payment after submitting the invoice- it the prepayment that a factoring company finance to the construction company.
- Time of finance- this is the time that a construction factoring company takes to complete the overall cost of the invoice.
- Process- Some construction factoring companies provides you the option of filling the form through online means. There may be other general documentation such as bank statements, file of contracts, etc.