Selecting the Best Construction Factoring Company
When it comes to providing invoice factoring services for construction-related businesses, there is a limited selection of organizations from which to choose. Selecting a funding source that specializes in the construction industry is essential, yet it can be time consuming to sort through the hundreds of factors who do not. The good news is that you can stop searching and start working with someone who understand the nuances of the industry as detailed on our Construction Factoring page. In our experience, some of the questions to consider when searching for the best construction factoring company are as follows:
1) Do they specialize in the construction industry?
This is likely the most important question you could ask of a prospective funding partner. Although a factor may also specialize in a number of areas outside of construction, this should not be viewed as a problem as long as the factor has a stellar track record of working with construction companies on a regular basis. Due to the complex nature of selling construction receivables, it’s vital that your factor understands lien rights, the various billing practices, and other intricacies unique to the industry.
2) Will they factor progress payments?
For a variety of reasons, many subcontractors utilize progress payments to bill general contractors. However, many general factoring businesses shy away from funding these types of invoices because they are uncomfortable with the potential for billing disputes. Knowing whether a factor will work with these progressive billing situations is critical, even if it’s not your primary billing method.
3) Do they provide spot factoring facilities?
Spot factoring is a program whereby you, as the client, possess the ability to only factor the invoice(s) you choose, while not factoring others. This can be an excellent option for sub-contractors who work on projects with vastly different payment terms or just need a one-time funding. There is simply no requirement to factor every customer, or even every invoice for a particular job. You choose which receivables to sell and which ones get paid on your customers’ standard terms.
In addition to these questions, you’ll want to know if there is a long term contract required, minimum volume expectations, and answers to a number of other items covered in our earlier blog post here. We know just how time consuming finding the right match can be and that’s why we’re committed to making your search as simple as possible – just give us a call at (888) 515-7501 or send us an email at sales@orionbusinesscapital.com to get started. We’ll be happy to discuss your business and its capital needs.