We Deliver The FUNDS
We Deliver The FUNDS
Invoice Factoring for Construction Contractors
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We can help you business with:
What Is Construction Invoice Factoring?
Construction factoring, also known as construction invoice factoring or accounts receivable factoring, is a financial service that allows construction companies to convert their outstanding invoices (accounts receivable) into immediate cash.
Construction companies can use our cash advance to:
Make Payroll And Taxes
Take On New Jobs
Pay Operating Expenses
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Construction companies can use our cash advance to:
Make Payroll And Taxes
Take On New Jobs
Pay Operating Expenses
Construction companies face everyday cash flow challenges with checks not coming in on time. We can help you manage the wild swings in cash flow by getting your money now; not waiting 30, 45 or 60 days. Your suppliers get paid quickly, so that you can negotiate the very best pricing.
Not all factoring companies understand construction receivables. Financing subcontractors and construction invoices involves many moving parts in the process. Unlike other industries, the receivables can potentially have supplier liens and we know how to address this type of situation.
Please Note: To qualify for approval, construction contractors need a minimum of one year in business and $100,000 monthly revenue from multiple clients.
Commercial Construction Accounts Receivable Financing Programs
1st Commercial Credit can provide you the cash resources that fuels your business through our commercial construction accounts receivable financing programs. We understand commercial construction and have financial sources that specialize in both commercial general and subcontractors funding.
Trouble Covering Payroll
Anytime your business has to offer credit terms, you need to be prepared for billing cycles that can put you behind on your cash flow. Payroll and 941 Tax obligations are crucial, including subcontractors you have to pay after they have completed their work. 1st Commercial Credit can help your construction company with the cash flow gap by funding your invoices after the jobs have been completed and helps your business stay current with payroll.
Turning Away Jobs Due to Lack of Cash Flow
With our factoring line of credit, you can now take on larger jobs that require more cash flow during the progress billing cycle. As you deliver the progress billing stages, we fund the invoices so you can continue to pay key suppliers and subcontractors as the job completes to its phases.
General Contractors Want to do Business with Financially Backed Contractors
We are finding that more general contractors want to deal with more financially stable construction contractors due to the double payment liability in supplier liens.
Contractor Financing Program
Our program is tailored to support businesses that engage in contracts with local, state, and federal government agencies. We specialize in financing direct federal government contract receivables and contracts from prime contractors, offering a reliable solution to improve cash flow and sustain operations.
Our program is beneficial for businesses participating in government initiatives aimed at expanding opportunities for a diverse range of contractors and vendors. We are committed to empowering the following types of businesses:
- Locally owned businesses
- Minority owned businesses
- Female owned businesses
- Disadvantaged businesses
- Small businesses
The program has been developed to provide working capital for contractors so they can properly execute their government related construction contracts.
In order to have a successful construction funding program, we have chosen to outsource this service to investment partners that understand the contractor industry.
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They can track and monitor your contracts and invoices and act as your advocate. In this way, we are able to arrange project financing for you and facilitate your compliance with your funding. Our partners will finance your project and your payments will be made directly to them.
Together with our investment partners and disbursing agents, we offer a complete program that finances your project and helps manage your cash flow for the benefit of your customer, and, most importantly, yourself.
The Disbursing Agent helps you financially manage your project by making all payments to suppliers, subcontractors and payroll on your behalf. All cash flow related to the job, including the loan and payments from your customer, is handled by the Disbursing Agent.
This relieves you of much of the financial management burden of the project and ensures for all that necessary payments are made on time to avoid issues of mechanics’ and suppliers’ liens, loan default, etc. You will contract with them directly and make all requests and arrangements for payment of project expenses with them.
Our funding partners have years of experience in asset-based lending and contract lending, we work on your behalf to arrange your funding and facilitate its administration. Some features and benefits of the program may include monitoring and tracking your contracts and invoices. Others services may include packaging and communicating your requests for advances to the lender and communicate the lender’s requirements to the Disbursing Agent.
Benefits of Invoice Financing for Vendors
Invoice financing offers several advantages that can help vendors manage their cash flow more effectively and focus on growth:
Difference between Construction Factoring and a Bank Loan
Construction factoring is ideal for companies needing quick cash flow without taking on debt or dealing with lengthy approval processes. In contrast, a bank loan may be better suited for long-term financing needs and larger capital investments but requires more stringent qualifications and a longer repayment commitment.
Banks typically lend based on the fixed assets you offer as collateral and rarely provide financing options tied to construction receivables. With invoice factoring, you can access working capital within days by leveraging your invoices for completed services, rather than waiting months for a bank to process your loan.
The key difference between A/R financing and a bank loan is that A/R financing leverages your customers' creditworthiness, not your own. A bank loan depends solely on your assets and ability to repay. With factoring, your growth potential is tied to your customers' credit quality, allowing your credit line to expand as you secure more creditworthy clients.
By using construction factoring, companies can maintain healthy cash flow, gain flexibility, and position themselves for growth.
Clients in the construction industry have the following cash flow issues:
Typical Construction Related Industries We Fund
The industries below are the most common but we can finance any type of construction related contract receivable.
- Appraisers
- Asphalt
- Cable Companies
- Carpenters
- Electrical Contractors
- Roofing
- Plumbing
- Electrical Contractors
- Tile Contractors
- Underground Utilities
1st Commercial Credit is committed to helping small contracting companies take advantage of opportunities to grow their business.
We create a winning situation all around. We utilize the good credit of the entity ordering the products or services to finance the contractor or vendor who otherwise cannot take on the contract.
The vendor wins by accepting and executing new business opportunities that will take them to the next level. The purchasing entity wins by accommodating greater diversity among its vendor base. In many cases, the purchaser has stated or mandated goals for participation among certain types of vendors – We help achieve these goals.
How to find the best factoring company for small businesses?
Factoring companies are not always the right fit for every type of business. Therefore, it is the right fit when your business is facing difficulties paying suppliers, keeping fixed overhead afloat, or having troubles making payroll due to sales on credit terms?
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Factoring becomes the right solution when your business is struggling with cash flow issues due to extended payment terms. If you find yourself unable to cover supplier costs, maintain overhead, or meet payroll obligations because your cash is tied up in unpaid invoices, factoring can provide the immediate funds you need. By converting your outstanding invoices into cash, factoring allows you to keep your operations running smoothly, avoid debt, and continue growing your business without the delays and restrictions of traditional financing options.
Instead of applying for a business loan or business line of credit, construction companies choose factoring for fast cash that can be in their hands within 24 hours. When dealing with traditional bank loans, it can take months to get financing. Factoring is a quick and reliable alternative to banks. In addition, the amount of available capital grows as the business sales grow.
Construction companies find themselves in one of the most competitive industries across the United States, and 1st Commercial Credit can provide the funds needed to thrive and succeed in this sector. As a result of the continuously evolving industry, constructors are currently facing both challenges and opportunities. Accounts receivable financing improves cash flow by providing immediate cash on outstanding customer invoices. Instead of making you wait days, weeks, or even months for payment, accounts receivable factoring gives you money today.
Construction Factoring Cost (Rates and Fees)
When considering factoring services for your construction company, understanding the costs involved is crucial. At 1st Commercial Credit, our rates are designed to be competitive and transparent, ranging from 2% to 3%. These fees reflect the flexibility and speed of cash flow solutions we provide, ensuring that you can access the funds you need quickly without hidden costs. Whether you need immediate capital to cover payroll, manage supplier payments, or seize growth opportunities, our factoring rates offer a cost-effective way to enhance your business's financial stability.
FAQ About Construction Companies and Factoring
After completing a project, you issue an invoice to your client. Instead of waiting for payment, you can sell the invoice to a factoring company. They provide you with a large percentage of the invoice amount upfront and then collect payment directly from your client.
Factoring companies focus more on the creditworthiness of your clients rather than your company’s credit. This makes it a viable option for construction businesses with limited credit or a short operating history.
Factoring can actually improve client relationships by allowing you to focus on delivering quality work rather than chasing payments. The factoring company handles collections, which can help streamline your operations.
