Construction finance (also referred to as 'construction factoring') is a funding solution for contractors and subcontractors through which cash is advanced based on the value of raised invoices. This can be for works carried out within a contract, construction agreement or purchase order.
If you’re facing the pressures of paying suppliers and employees due to unpaid invoices - construction finance can help support your business and offer the healthy cash flow required. Not only is cash flow one of the biggest obstacles for businesses, but it can also create lags in construction projects at every stage. You can look to address these cash flow issues, creating a more stable cash flow to help your business grow.
A shortage of money may mean you can’t spend money on necessary expenditure, including building materials, staff wages, supplier payments, bills and other expenses. With construction finance, you can receive up to 95% of the invoice value in as little as 24 hours. It’s quick, stress-free, and best of all - you don’t have to worry about cash flow again.
As with many industries, construction companies aren’t exempt from cash flow issues. If your clients have 30, 60 or sometimes 90-day or more strict payment terms, it can be challenging to manage cash flow adequately. You could struggle to grow your business with a cloud of financial uncertainty over your head.
Knowing where you stand financially can lift the pressure off your shoulders as you carry out your contracted work. With the help of up to 95% of the invoice value, you’ll now have the working capital to use to help complete the job at hand.
With contract work usually taking the form of milestone invoices, it can be challenging to continue buying materials you require to complete the job when you haven’t received payment.
By having an invoice finance facility in place, means you can confidently complete the job to a high standard without having to chase for client payments. This means your contracts can run smoother as you’re not held back by cash flow problems, helping your business thrive.
Invoice Factoring - This can be known as ‘construction factoring’ and simply hands over the credit control responsibility to the lender, such as collecting payments. It’s an additional service to the finance facility and can help free up your time, but your customers will know that you are using it.
Invoice Discounting - The credit control responsibility stays with your business as normal. This is the simplest form of invoice finance and keeps it 100% confidential, so your customers will not know.
Did you know? The construction industry is one of the largest sectors, contributing a huge £117 billion annually (6% of GDP) to the UK economy, creating 2.4 million jobs according to recently published statistics by the House of Commons Library.
Lengthy payment terms imposed by main contractors can cause cash flow issues for subcontractors such as Joiners, Plumbers, Electricians and Ground Workers. Construction finance solves this issue by releasing the cash tied up in your applications for payment, staged invoices or sales invoices.
Raise and submit your construction invoices such as staged invoices or certified / uncertified applications for payment to the finance provider.
Get up to 95% of the invoice value upfront, minus any agreed fees in just 24 hours.
Depending on the service you choose, the collections process is done by the finance provider or confidentially kept in-house. Once the customer makes the payment, the remaining balance will be released to you.
Introduced on 1st March 2021, the VAT domestic reverse charge changes how Construction Industry Scheme (CIS) registered businesses such as contractors and sub-contractors handle and pay VAT.
The new VAT domestic reverse charge is designed to combat 'missing trader' fraud by shifting VAT payment responsibility from the supplier to the customer unless they are the end client in the supply chain. This means that businesses will no longer be able to rely on VAT money for cash flow.
If your Construction Industry Scheme (CIS) registered business is affected by the recent VAT domestic reverse charge, it might harm your short-term cash flow. This is where construction finance can help by releasing funding locked in invoices without waiting and chasing for payment.
We are passionate about helping UK construction businesses grow and sustain that growth through tailored advice and carefully selected funding solutions.
Depending on the service you choose, the collections process is done by the finance provider or confidentially kept in-house. Once the customer makes the payment, the remaining balance will be released to you.Apply Now
Quick Decision with No Obligation
Quick Decision with No Obligation
Since 2014, we've helped many businesses, large and small, get access to the working capital they need through invoice financing.
Some of the funders we work with