EVENTS

One of the most common issues that new subcontractors face is receiving financing prior to beginning new projects. It can take several months for payment to be processed after completing a job. Construction factoring can be a great resource for new subcontractors who haven’t had the opportunity to establish good credit yet because they can receive a large payment upfront and won’t have to worry about paying back bank loans later.

Factoring companies buy unpaid invoices from subcontractors and, once approved, will pay you around 70-90% of the invoice value in as little as 24 hours. After the client has paid the bill in full, the factoring service will send you the remainder of the money owed to you. They automatically deduct a fee for their services, which typically ranges from 2-6%.

When you begin researching construction factoring services, it is a good idea to ask other professionals in your industry for recommendations and thoroughly research companies online. Make sure the company you choose is reliable and offers a competitive rate. Different rates might be better or worse for you depending on your situation. For example, some factoring services will pay you a higher percentage upfront and then charge a higher fee, while others will do the opposite. Depending on the creditworthiness of your clients or your relationship with the factoring company, you may be able to negotiate better deals in certain situations. It is also essential that you find a factor who has been able to maintain lasting relationships with construction companies, as this industry presents its own unique financial challenges for lenders and subcontractors alike.

Once a factoring service has purchased your invoice, they are liable for receiving the full payment from your client. Factors who specialize in the construction field have experience using different methods to encourage your clients to pay in a timely manner. The sooner the full amount you are owed is deposited into your bank account, the sooner you will be able to invest that money back into your business and pay off your debts. This will likely allow you and your employees to have steadier paychecks and busier work schedules. Having consistent work is one major way to keep good employees around and quickly build up your reputation in the community.

If you are new to subcontracting in the construction field, finding a good construction factoring service could drastically improve your career. You will no longer have to worry about your clients being unable to pay you for your work within a reasonable time frame. Upfront payments from a factor can allow you to maintain a steady payroll and cover your own bills during slow seasons. It is one easy way to improve your peace of mind.

VortexFunding.com is a direct lender and also has long standing syndication relationships
with banks, hedge funds, life companies, and private investors worldwide.


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