There comes a time that every demolition business could use more working capital for things like making payroll, buying supplies or taking on bigger or new jobs. It can be challenging for demolition contractors to wait the 45, 60 or more days for customers to pay their invoices and the economic climate over the past few years has made it hard for you to get a bank line of credit. Fortunately, demolition contractors have another option, accounts receivable factoring. Factoring can provide relief to your demolition business by giving you access to immediate working capital without your customer having to pay quicker than they normally would. Additionally, factoring allows demolition contractors to consistently meet their payroll, pay vendors timely, buy supplies and bid on more jobs they otherwise couldn’t.

The Four Easy Steps to Accounts Receivable Factoring
Accounts receivable factoring can provide your business with a continuous source of operating capital, here is how it works:

  1. You send your invoice to your customer and a copy to the factoring company.
  2. You receive up to 80% of the invoice from the factoring company.
  3. The factoring company collects payment from your customer when the invoice is due.
  4. The factoring company pays you the balance of your invoice amount, less a fee.

Benefits of working with a factoring company

If you go to a bank for a loan they will consider whether your company is financially sound, factoring companies don’t look at the size of your business, how long you have been in business or your creditworthiness. In fact, factoring companies look at the creditworthiness of your customers. If your business has a creditworthy commercial customer base with unpaid invoices you can benefit from factoring.

Additional benefits of accounts receivable factoring:

  • The demolition business owner does not incur any debt as they are “selling” the receivable as long as their customer pays the invoice.
  • You are able to take advantage of early payment discounts from suppliers, as the factoring company will often pay your creditors right away.
  • You no longer need to offer early payment discounts because you are getting payment right away from the factoring company.
  • The factoring company will do due diligence on your customers making sure they are credit worthy so in turn giving you often free professional credit monitoring of your clients.
  • You can concentrate on building your business and making money instead of wasting your time worrying about when you are going to get paid.

Accounts receivable factoring may not be the first option you thought of when thinking of a working capital solution for your demolition business but it can be the perfect solution to your cash flow challenges. There truly can be no downside. It can be just what you need to get the cash for your demolition business to make payroll, buy supplies, pay vendors and grow your business.

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