Steady Cashflow for Your Contractor Wages
The fast-paced world of construction brings with it many challenges for construction firms of all sizes. Managing cashflow can become a major issue, particularly for firms which have seen rapid growth or those which are expanding into new sectors. Ensuring that you have the required cashflow for development finance and contractor wages could mean the difference between a successful project and one which fails to meet the client’s expectations; so what can you do to ensure that cashflow issues become a thing of the past? Construction factoring could be the answer.
Why Might Construction Companies Struggle with Cashflow?
Maintaining a fluid credit facility isn’t always easy, particularly if you are working on large build projects. You need to pay contractors working on your projects, and you also need to ensure that you have finance available to fund your work. This includes funds to cover the costs of materials and labour. Construction companies, particularly whose working under JCT contracts on large builds, may find the stricter restrictions imposed by these contracts can impact cashflow, making it difficult to pay contractors, purchase supplies and complete projects to tight deadlines. By ensuring finance is in place at all times it’s easier for projects to be completed on schedule – it also enables firms to start work on new contracts without waiting for payment from clients.
What is Invoice Factoring?
Invoice factoring is very popular for construction firms of all sizes, as it releases the equity tied up in your contracts within 24 hours. Up to 90% of the value of invoices are paid within 24 hours, allowing you to complete projects and move on to the next contract, paying contractors for their work.
This service also helps to reduce overheads as there is no need for an accounts receivable department – funders deal with collecting payments from clients on your behalf, leaving you free to focus on growing your business and finding new contracts. Development finance enables you to take on bigger and better contracts rather than turning down work due to cashflow worries.
Could Your Firm Benefit from Invoice Factoring?
There are many benefits of invoice factoring. For example, you’ll be able to purchase larger quantities of supplies for your projects without worrying about money, and you’ll also benefit from a reduction in recruitment, staffing and accounts costs. Invoice factoring is low risk, meaning that you won’t borrow more than your firm can afford, and accessing this service is easy. You just need to contact a funder with experience working with construction firms, and the rest will be taken care of.
What About Invoice Discounting?
For those who prefer to stay in control of their client relationships, invoice discounting may be a better option than invoice factoring. With invoice discounting, you remain responsible for collecting invoice payments from your clients, whilst the funder takes care of releasing the equity in your invoices, improving your firm’s cashflow.
Construction firms of all sizes can benefit from development finance and construction factoring. So if you would like to enjoy improved cashflow and spend your time focusing on growing your business, get in touch with us today. To find out more about what’s involved, just call us on 0330 134 2826 or email firstname.lastname@example.org.