Construction invoice factoring works just like any other form of invoice finance. The facility allows construction companies to access money from unpaid invoices prior to the original due date of client invoices, albeit at a small discount. The reason many lenders will specifically call it ‘construction invoice factoring’ is they know it can be particularly useful for construction companies as the industry traditionally settles invoices much slower than other industries.

Construction invoice factoring essentially allows you to advance the majority of your payments (usually around 80-90% of the value of the unpaid invoices) that you are expecting to receive for jobs you have completed. So you don’t have to wait the full 30, 60 or 120 days for payment. Once the payment terms are up and the lender receives the full value of the invoice, you’ll receive the rest of the unpaid balance of the invoice, less the lender’s fees.

Having immediate access to cash allows construction firms to pay staff, purchase raw materials, hire equipment and pay its own suppliers. It may be you can even outsource the account receivables process so you can focus more of your time on construction and less time chasing invoices. The solution is also scalable because as the size of your invoices grow, naturally the amount you can receive through commercial invoice factoring grows too. You won’t have to worry about renegotiating any debt facilities with your lender.