Contractors and contractors have always been concerned about the seasons in the construction industry more bonuses. Construction factoring is a great way for these businesses and individuals to get quick access to capital. Some construction factoring firms have even gone as far as re-designing their systems to better fit the needs and wants of the industry. Construction Factoring articles: If banks hesitate to loan to construction companies, increase your business with them. Construction factoring generates revenue of over one billion dollars a year.
Offering construction factoring to subcontractors and contractors is a very attractive option. Most traditional lending institutions view construction as a highly risky endeavor. It is in the nature of traditional lenders to only invest in the most reliable businesses. Construction can present a number of challenges. The traditional lending institutions may not consider a contractor unless he can show a steady cashflow for at least a few years.
Construction factoring business understands the intricacies. The construction industry’s delays and cost overruns can cause major financial issues. Plans change. Weather impacts the number of workdays. Contractors rarely say that their project was completed within budget. Construction factoring firms have the ability to anticipate these situations and offer financial solutions. The factoring company purchases your invoices and pays a fair factoring fee in return. The contractor can use the money to purchase materials, pay employees and continue working on the project.
Most building contractors don’t have the resources, both financial and physically, to manage more than a few projects at a given time. Cost of materials, and the cost of labor are major obstacles in the construction sector. It does not affect any other industry. Construction companies have shut their doors in many instances because of delays or other risks. Construction factoring firms are specially designed to cater to this industry. Many of these businesses have come from the construction industry.
Construction factoring doesn’t affect construction as a sector, but can help provide the necessary financial assistance to maintain the growth of the industry. Construction factoring charges higher fees than other industries. Fees are higher because of the fluidity of the construction industry. Construction factoring businesses retain a certain sum for disputes. This usually ranges between 25-30%. Even though this rate might seem high, contractors are often willing to pay a premium for security.