This Type of Financing Can Make or Break Your Next Construction Project.
How Can Accounts Receivable/Invoice Financing Help Fund You and Your Team?
Running a construction business or project team can be a challenge. Ensuring deadlines are met, ordering supplies and materials, and meeting financial commitments, are all crucial obligations for team leads and company owners. This becomes even more challenging if there isn’t enough revenue coming in from unsettled client accounts. You might have experienced first hand how a disruption in cash flow can bring your project to a halt. We all understand that vital materials are no longer available if bills are left unpaid; and workers leave if payroll commitments are not met. This is why it’s important to assess all options when ensuring your project has the capital it needs to stay on track.
We know that construction companies rarely deal in cash payments. Instead, most of our agreement with clients stipulates that the contractor will receive payment in terms. For government contracts especially, invoices are not paid until 30 days after project commences. This means that you’ll have to start spending money to start the project before your first invoice is paid. This is where accounts receivable financing (also known as invoice financing) comes into the picture. Invoices act as collateral against loans as they represent potential income that is yet to be realized under your contract. In this case, the lender only looks at the creditworthiness of your client in deciding whether or not to approve your application.This type of financing can help fill the inevitable cash flow gap many contractors and construction companies come across; and in some case, be the determining factor in your project’s success.
