Construction Finance
In the construction industry, cash flow is often a big challenge — payments are delayed because of long project timelines, staged payments (valuations), retentions and lengthy approval processes. Invoice finance is a way to smooth that gap by unlocking money tied up in unpaid invoices and applications.
What is Construction Finance?
Construction Finance is a specialist product for businesses involved in the Construction Sector, but really should be called contracting finance. The product allows businesses to raise working capital against their outstanding invoices and applications for payment on on-going contracts on a confidential basis.
Construction invoice finance turns your work-in-progress into working capital. Instead of waiting months to get paid, you can fund materials, wages, and new projects straight away.
- Key Features:
- Unlocks cash tied up in unpaid invoices and applications
- Short-term working capital support
- Flexible - for all types of contracts
What is Construction Finance used for?
It’s used to enable businesses to raise working capital to fund an on-going contract to allow them to buy supplies, pay staff and take away the stresses of day-to-day cashflow.
Why use Construction Finance?
The product helps a business access working capital, but it also allows a business to grow by taking on larger projects knowing that they can fund both staff and supply purchases.
How does Construction Finance work?
A percentage is agreed between the lender and you against your applications or invoices based on the average contract values you work. You obtain the funding on uncertified applications allowing your business access to cash as soon as you submit the application or invoice to your debtor. All this process is done on a confidential basis, so your debtor is not aware of an involvement from the lender.
Best for:
- Contractors and subcontractors who face cash flow gaps between invoicing or applications and receiving payment
- All sized construction businesses handling multiple clients
Benefits of Construction Finance
Improves Cash Flow
Can cover wages, materials, plant hire etc.
Allows business to take on projects
No waiting for outstanding invoices to clear, before taking on more projects
Reduced reliance
No need to rely on overdrafts or loans
Provides flexibility
Funding grows as sales grow
Confidential product
A plus in the sector, allows the business to fund itself properly without anyone being aware of the funding being in place
5 Steps for Construction Finance
1
Get in touch
2
Meeting to assess your needs
3
Meet lender
4
In principal offer from lender
*7 days if all correct information is received
5
Accept offer
Speak to us about your requirements
Eliminating stress and ability to pay wages and suppliers on time
A drylining business based in South Yorkshire, was working on several contracts ll more than £100k each. On each site the business had to provide materials and men, working for 30 days, and then raising an application for payment which they had to work for another 30 days to be paid for. In effect carrying the debt for 60 days.
Each Friday they would struggle to make sure that they had enough funds to pay wages and purchase materials for the following week. The business was also falling behind with HMRC payments.
Introduction to a Construction Finance provider who visited the business and was able to offer them 70% on each of the applications raised without them having to be certified. The lender not only put the facility in place for on-going applications or invoices but was to take on the current applications that the business was waiting to be paid for allowing the business to have access to a cash injection of circa £50k to bring HMRC up to date and settle suppliers.
Moving forward each time the business raised an application it was able to have access to 70% of the value to use to fund wages and suppliers making Fridays a much more enjoyable day for the business.