Construction Factoring: Meeting Financial Obligations
One of the major obstacles to running a strong, financially stable and successful construction company is having slow-paying clients. When your clients and customers are taking months to pay for your services, it inhibits your ability to buy the materials and pay your staff to start new projects in order to bring in more profit. Fortunately, there’s a way around this issue that practically any business owner can use: construction factoring. This is a simple financial move that can really help to alleviate the growing pains construction companies often experience when in the small business stage, and has several benefits to offer.
How it Works
When you choose to use construction factoring for your business, you aren’t taking out a loan. Rather, you’re selling the unpaid invoices from your customers to a third-party factoring company. This company gives you the money from the invoices up front (minus a small fee for their business) and then collects the payment from the customers to compensate them later on.
The Big Benefits
The first and most important benefit of construction factoring is that you’ll be able to get your hands on the money you need to keep accepting projects more quickly. This means you won’t be limited regarding the amount of work you’re able to accept, and can help your business grow and develop more quickly than ever before without cash restraints due to slow-paying customers.
Next, you won’t be incurring any debt when you choose to use this method to get the cash you need. Because the money is yours, you won’t need to worry about expensive, cash-flow-draining payments in the coming months that could crush your progress in slower months when you’re not receiving as many jobs.
Finally, it’s easy to qualify for this particular arrangement. When you’re applying for a traditional bank loan, you could spend months filling out forms and providing documentation, but that’s not the case with factoring companies. In fact, these companies will care much more about your clients’ creditworthiness than your own, as those individuals will be the source of their cash down the road. You won’t require any collateral beyond the invoices themselves either, which leaves your important real estate and equipment free of threat.
Owning a construction business can definitely be a challenge in the modern era, but with the right financial support, you can beat the odds and make your company into a success. Construction factoring could very well be exactly what you need to get your business growing strong in no time at all by helping you take care of your financial obligations with less struggle.