The accounts receivable payment cycles of 45-90 days can really stretch cash flow thin making it difficult to pay your team and purchase required materials. This is when invoice factoring for drywall businesses can be a beneficial financial solution. Factoring provides an easier influx of cash by turning outstanding invoices into quick working capital.
Why Factoring Works Specifically Well for Trades like Drywall
If you found this page you are probably well aware that banks and the construction industry are not a great fit. This is where factoring excels. Factoring helps drywall contractors maintain cash flow without the hassle of traditional loans. Unlike banks which do not like funding construction, require extensive documentation, and have long approval times, factoring can be quick and straightforward. Drywall contractors can sell their accounts receivable quickly turning it into working capital, enabling them to focus on completing projects without worrying about finances.
Client Example:
Client: General Contractor in Florida
Situation: Working on a luxury resort hotel project, the wait for accounts receivable payments made it impossible for the contractor to pay their workforce.
Solution: $280,000 initial funding on the $1,500,000 contract.
Result: With CapitalPlus’ construction financing, the contractor met payroll on time. CapitalPlus’ lien compliance ensured all subs and vendors were paid and signed lien waivers. Factoring enabled them to focus 100% on their project without worry.
The Primary Benefits of Factoring to Drywall Businesses
- Quick Cash Flow Infusions: Factoring provides immediate access to cash tied up in invoices, helping drywall businesses manage their operational costs effectively.
- Focus on Growth: With predictable cash flow, drywall contractors can focus on taking on new projects that grow their business, rather than worrying about funding issues.
- Simplified Processes: Factoring companies handle the collection of invoices, reducing the administrative burden on your business.
- Lien Compliance: Ensuring all subs and vendors are paid and signed lien waivers can be a complex process. Factoring companies like CapitalPlus handle the lien compliance, providing peace of mind and ensuring smooth operations.
How Factoring Works
After an initial “are you a fit?” phone call, the contractor will be approved and asked to send minimal paperwork. Examples include submitting of the factoring agreement as well as a business license, and proof of insurance. After becoming a client, the factoring process can take place.
- Submit Invoices: After completing work, the drywall contractor submits their invoices to a factoring company and their client.
- Receive Funding: The factoring company advances a percentage of the invoice value, typically 80% of the invoice within 24-48 hours.
- Customer Payment: Your customer pays the invoice to the factoring company.
- Remaining Funds: Once the invoice is paid, the remaining funds are released to your business, minus a factoring fee.
Why Choose CapitalPlus for Factoring
For over 25 years, CapitalPlus has specialized in construction financing, offering tailored solutions solely for construction industries like drywall businesses. Our expertise ensures you get the funding you need without the red tape and slow turn of traditional banks. With our lien compliance services, you can rest assured that your back-office operations are handled professionally.
Ready to regain control of your cash flow challenges? Contact us or schedule a consultation to see if your situation is a fit. We can help you keep your drywall business thriving with reliable financing solutions.
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