![]() ![]() Use our automated invoicing system to streamline the whole process. You don’t need to resort to desperate measures like bank loans or mechanics liens when you take advantage of Flexbase’s invoicing options. Is negative cash flow dragging you down or threatening the growth or stability of your business? So, what is the best alternative to construction invoice factoring? Avoiding it in the first place! Learn more about how Flexbase can help you avoid construction invoice factoring below.Īvoid Construction Invoice Factoring and Manage your Cash Flow With Flexbase These disadvantaged can make invoice factoring a less-than-ideal solution to your cash flow problems. Factoring is available for commercial invoices only.It cuts off some of the communication between you and the client, which can add stress to the relationship.If they have a history of paying late (or not at all), the factoring company may not be willing to take on the risk. Most factoring companies only want to take on invoices from good customers.Factoring is only available for work already completed, not for upfront costs.It can be difficult to find a factoring company willing to take on the inherent risk that comes with the construction industry.The service comes at a cost that can eat into a company’s profit margin.Some disadvantages to be aware of include: The factoring company’s communication to you will include information on the “reverse amount” - the amount the factoring company will charge you for the service they provide.įactoring construction invoices also comes with a downside.After the client has paid the invoice in full, the factoring company will communicate with you regarding any remaining balances.After invoice payment - Final accounting.The factoring company will notify your client of the factoring agreement you’ve made along with instructions on how they can pay the invoice directly to the factor.After signing the agreement, you’ll be given an advance rate - usually 70 - 90% of the invoice amount.After signing - Communication with the client.Pay special attention to the fees, payment plan, and cash advance amount. Once you’ve settled on a factoring company, complete their application and sign the agreement.Research factoring companies to learn their experience level, their rates, and what other fees you may be charged.You’ll need to make sure that you qualify for factoring by identifying outstanding invoices that are between 30 and 120 days old.When invoice factoring for the construction industry, consider the following timeline: ![]() In return, the factoring company will advance funds to the construction company quickly, usually within 1 to 3 days. To factor an invoice, a construction company or subcontractor will “sell” or assign an outstanding invoice to a factoring company. Over time, it became harder to make the minimum payments on the cards and the business was held back from taking on new contracts and growing.How Does Construction Invoice Factoring Work? The company had been invoicing $30,000 a week but had to use personal credit cards to make payroll while waiting for invoices to be paid. Overcoming high-interest loans with invoice factoringĪ staffing agency in the healthcare sector came to Liquid Capital for invoice factoring. Without access to funds, staffing agencies often struggle to meet payroll and end up passing on business growth opportunities. For many, that can often mean funding major expenses (such as payroll) through traditional financing methods while waiting for clients to pay their invoices - whether that be companies or the government. Taking advantage of these staffing opportunities in the market requires capital and steady cash flow. For staffing companies helping place employees with businesses in healthcare, construction, accommodation and food, retail and manufacturing, there are many opportunities for growth. ![]()
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