If you’re in the construction business, you’ll know that starting a construction company can prove to be challenging, especially as this kind of business needs a lot of working capital in order to operate successfully.
In most instances, you will have spent thousands of dollars to purchase materials, equipment and to pay labor costs, and that’s before you even receive any kind of payment.
Furthermore, it can be difficult for a start-up construction company to acquire a traditional loan, hence the need to look at alternative funding options.
As a commercial financing company, we can give you the means to complete your projects promptly and with minimal stress, by funding your construction business.
Let’s take a look at how American Prudential Capital can help you, by showing you the kind of alternative financing available for construction businesses such as yours, and why this type of funding will be suitable for your company.
Invoice factoring for construction companies
Put simply, invoice factoring can be described as the trading off or selling of receivables by a company to a financing company such as ours, in exchange for immediate cash. Construction companies usually operate by offering its services to clients and then billing the client via an invoice.
In many instances, clients do not make immediate payment and it can often take anything between 30 and 90 days for the money to come in. As you can imagine, having to wait so long for payment can be financially crippling to a construction company, especially if it is relying on that income to sustain ongoing or future projects.
Invoice factoring is one solution that will help a construction company during this period. We will buy your invoices or accounts receivable for an amount that falls below their actual worth; usually 60% -80% of the cost stated on the invoice.
This kind of business transaction means that both of our companies benefit: we gain a percentage of the outstanding bill, while you receive immediate cash so that you can continue to operate your business.
The advantages of invoice factoring for construction companies
The number one advantage of choosing invoice factoring as a way to raise cash is that you’ll get the money you need, very quickly. Once your application is approved, you’ll receive your funds within 24 hours.
Furthermore, you can choose to sell all your accounts receivable, or just a selection of your invoices – the choice is yours. You’re in control of how many or how few you trade-off, depending on how much cash flow you need.
A second major advantage of invoice factoring is that once you’ve sold your invoices, as the alternative financing company, we will then handle all your uncollected bills. This leaves you free to concentrate on the business that matters most, and that’s finishing your projects on time.
After all, your expertise lies in construction, not in accounting. Plus, you won’t have to consider taking on extra personnel to look after invoice billing related tasks and chasing bad debt.
The third advantage of invoice factoring is that it takes considerably less time to organize than traditional funding. Furthermore, unlike traditional funding, you don’t have to have an A1 credit rating to take advantage of invoice factoring.
In fact, we’re more interested in the creditworthiness of your clients as that’s where we’re going to get our money from. Therefore, if your clients have excellent credit ratings, we’re going to be more than happy to take over your invoices.
Would you like to know more about alternative funding for construction companies?
Having access to that much-needed cash will be of great benefit when your business is going through tough times. In fact, it may even mean the difference between your business thriving and your business going under. By opting to factor your invoices, you’ll be able to hire the staff you need, obtain the equipment for the next phase of your project, and pay your personnel and suppliers in a timely manner.
So if you’re in need of Construction Company funding and you’re having problems securing what you need from traditional funding sources, get in touch with the team here at American Prudential Capital today.