May is once again upon us, which means the flowers are blooming, the temperature is heating up and it is once again Small Business Month. With that in mind, we wanted to salute all the small businesses in the construction sector and provide 15 things every small business needs to know about construction factoring.
- The number one most important thing you should know about construction factoring is that it gets you immediate access to the working capital you need.
- For construction factoring to work all you need are unpaid invoices and creditworthy commercial clients.
- Construction factoring does not look at your credit but the creditworthiness of your commercial clients.
- Building off of number 3, it also means that you could be eligible for construction factoring even if you have bad credit or little credit or are a new business.
- You can use the funds to pay for supplies, cover payroll, pay subcontractors or any other business expenses you have.
- When you find the right construction factoring partner there are no hidden fees including no application fee, no upfront fees, no wire fees, no hidden charges and no interest charges.
- You can find construction factoring companies who will offer you no long-term contracts, no monthly minimums and no penalties for non-usage. All of which puts you in the driver seat of your construction company’s finances.
- It is important that you find a partner who specializes in your industry because they will know the ins and outs and be a valuable resource to you since they truly understand your unique business challenges.
- Construction factoring provides your business with the ability to bid on larger jobs that you otherwise might not because of your limited access to working capital.
- Unlike many traditional financing options construction factoring companies will work with you even if you have paid when paid contracts and progress billing.
- A construction factoring company will pay and obtain lien releases from your suppliers and subcontractors providing you with an extra level of protection.
- Construction factoring companies implements checks and balances to make sure the projects are being completed as planned. This helps to ensure that everyone is on the same page; the work has been completed and is satisfactory on a regular basis.
- With construction factoring it only takes a few days to set up an account and once your account is set up you can expect to get cash in about 24 hours. The quick set up also includes only minimal paperwork and documentation. All of which is much different than when you try to get a traditional bank line of credit.
- Construction factoring is very flexible when considering your account limit since the limit is based on your accounts receivables. This means that your limit can grow with the growth of your business.
- The right construction factoring company can also assist your company with services other than factoring. Some offer lien compliance, credit services and bookkeeping services to compliment the factoring.
I hope this has given you invaluable information about construction factoring and shown you many ways in which it can benefit your business. We have had the pleasure of helping numerous small businesses in the construction sector get the working capital they need to grow their businesses utilizing construction factoring. If you business could benefit from these services I encourage you to consider it as well.