Finance or Factoring For a Construction Contractor
If you are a construction contractor the likelihood is that you are feeling a bit unloved by the banks and other finance providers. The good news is that Funding Solutions is well versed in the construction sector and we do have financial solutions that can assist you. One of our directors has operated as the financial director of a contractor within the construction sector.
How to finance applications for payment?
As a contractor there is a good chance that you are having to submit applications for payment to a main contractor and then having to wait a considerable time for payment. In the meantime you have to pay your own staff or subcontractors for the work done and suppliers will also need paying. In these instances construction factoring may be a suitable solution for your business.
Construction factoring can allow you to raise working capital against outstanding applications for payment that you have submitted. This can allow you to meet wage payments and supplier payments when needed without worrying about when you will be paid by the main contractor. Typically we can raise up to 70% of the value of the outstanding application or applications.
When looking at construction factoring we will need to understand when you raise the applications for payment, when this is signed off and when this is paid. Importantly, we will also need to understand at what stage you require funding.
The factoring agreements available range from whole turnover agreements where you notify every application or invoice through to single transaction facilities where a single invoice or application for payment can be financed.
Finance for new machinery
If you are expanding you may require new plant or machinery. By using asset finance you can spread the cost of the purchase over a suitable period linked to the life of the asset you are purchasing. The asset will be yours at the end of the finance agreement. There are also facilities where the cost of the initial VAT can be spread over the term or where the VAT can be deferred.
The key is to ensure that any facility that is used to purchase new assets can be sustained within your cash flow. We work with you to ensure that any facility is structured to meet the needs of your business.
Refinance existing assets
You may decide that a cash injection is needed into your business. If you already own assets within the business with little or no finance on them then we can raise cash against these assets by way of asset refinance. The amount raised will depend on the value and suitability of the assets but it can provide a valuable cash injection.
This cash injection will of course help cash flow but it is important to remember that it will also attract a monthly repayment that will be a cash outflow every month.