| Very few companies are financing businesses in the | | | | funds against invoices and provides enough money to |
| construction industry today as the industry risk is still | | | | pay the bills. |
| too great. Many general contractors and | | | | Following are a few things you can do for starters, |
| subcontractors are reeling from the effects of the | | | | to prepare better if you are in the construction |
| building bubble. | | | | business. Before calling any business finance company, |
| And to add insult to injury, many construction | | | | be sure to have your house in order, specifically: |
| companies who obtained a business loan will probably, | | | | 1. Make sure you have up current, up to date financial |
| or already have found themselves out of covenant. | | | | statements. This includes a balance sheet, income |
| This is due to falling sales. Simply put, banks won't let | | | | statement/Profit & Loss, A/R aging report and AP |
| them tap into their lines of credit until their sales are | | | | aging reports |
| back on track. | | | | 2. Handle any unpaid taxes as best you can, |
| What's more, even in the factoring industry, few | | | | 3. Try to clean up your receivables - and quickly |
| companies dare to offer construction factoring since | | | | handle any accounts that are past due for more than |
| the risks of default are still high. However, in many | | | | 70 days. |
| cases a factoring company will be able to help. There | | | | Although there are no guarantees in this economy, |
| are quite a number of firms specializing in construction | | | | these three steps that should help you better |
| factoring. | | | | position your company for funding. |
| Historically, construction factoring has been used in | | | | Also remember that the construction industry is one |
| the construction industry for years. The latest trends | | | | of several sectors that can benefit tremendously |
| indicate that the recent economic downturn and | | | | from invoice factoring. The sub-contractor, or |
| tightening of the credit markets has been especially | | | | construction company is no longer required to wait |
| hard on the construction industry. contractors are | | | | for payment before starting on the next phase of a |
| experiencing cash flow problems and having to focus | | | | project, or begin construction on a new project. |
| on the new sustainable building code standards. The | | | | Factoring enables the sub-contractor or construction |
| availability of commercial financing has been chaotic | | | | firm can realize quick turnaround of 48 hours on |
| for the past year, so the situation is especially | | | | accounts receivable due for completed stages of a |
| evident when seeking construction funding for | | | | construction project. With construction invoice |
| commercial property. | | | | factoring, the construction company, or |
| Invoice factoring allows businesses to obtain funds | | | | sub-contractor, can be paid virtually overnight for |
| based on their current accounts receivables. | | | | these invoices (accounts receivable) thus speeding up |
| construction subcontractors have to wait as long as | | | | cash flow and improving the company's ability to |
| thirty (30) to ninety (90) days to get paid for their | | | | start immediately on the next phase of construction. |
| outstanding invoices. Construction factoring advances | | | | |