What Is Contractor Invoice Factoring?
Contractor invoice factoring is a funding option for contractors and subcontractors who need to release cash from unpaid invoices.
This allows contractors to access part of the invoice value earlier instead of waiting for full payment.
How Contractor Invoice Factoring Works?
The typical process looks like this:
• Contractor completes work or reaches an agreed project stage
• Invoice is raised to the developer or client
• Factoring provider advances a percentage of that invoice
• Contractor uses funding to cover labour, materials or working capital
• Remaining balance is paid
Why Do Contractors Use Invoice Factoring in Construction?
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Contractors often wait 30, 60 or even 90 days for payment. Invoice factoring helps bridge this gap by releasing cash earlier. |
Construction businesses often need to pay workers, subcontractors and suppliers before invoices are settled. This creates pressure when materials need ordering or labour needs paying. Factoring helps ease these pressures by releasing cash.
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Contractor payments are often linked to project milestones. Invoice factoring helps smooth cash flow between these stages. |
Why Is Contractor Factoring Different From Standard Invoice Factoring?
Contractors often deal with:
• Retentions
• Stage payments
• Longer payment cycles
This means the service needs to work around how contractors are paid, not just standard invoice dates.
A lender or broker with construction finance experience will understand these payment structures.
What Contractor Invoice Factoring Costs Depend On
Contractors often deal with:
• Discount rate on advanced funds
• Customer payment behaviour
• Invoice value
• Project size
Contractor payments can be more complicated than standard invoices.
Carefully comparing providers and understanding full costing before committing is essential.
Which Contractors Can Use Invoice Factoring?
• Civil engineering firms
• Scaffolding companies
• Electrical contractors
• General contractors
• Subcontractors
Invoice factoring is usually suitable for contractors and subcontractors who invoice other businesses and wait for payment after work is completed.
How Simply Factoring Brokers Can Help
Simply Factoring Brokers works with UK lenders to help contractors find suitable invoice finance solutions.
Our personalised service:
• Matches you with lenders experienced in construction finance
• Helps compare funding options
• Simplifies the application process
This allows you to compare options without approaching multiple lenders individually.