Construction companies and subcontractors know that having cash at the right time is crucial. This industry relies on an endless amount of workers, vehicles, equipment and more to succeed.
Most new construction companies struggle to control their cash flow because of the wait time between starting the job and getting payment. New businesses need an extra push to get started off on the right foot and grow. With construction factoring, your business can do just that.
Here are 5 vital reasons why subcontractors should utilize factoring as their main form of financing.
1. Financing Options Are Slim For New Companies
As you may have experienced, getting financing for your new construction business from a bank can be daunting. Banks require information that your new business does not have. A bank will require you to show your business’s sizable assets, solid collateral, long track records of profitable operations, and more just to apply for a loan.
With construction factoring, your construction business will be able to get financing without showing any financial history or personal FICO scores. A factoring company purchases your outstanding account receivables and invoices to get you the cash for your projects immediately.
2. You Need Cash In Your Pocket To Complete Construction Jobs
As you know, your construction business needs cash to complete jobs. Throughout the job, you will need cash for materials, tools, equipment, employee wages, and more. Without financing, not only will your work suffer, but also your business’s reputation.
With construction factoring, your business will get a cash advance for unfinished projects. This will ensure that you have the right amount of funds for your project to be completed.
3. You Can’t Afford To Wait Up To 90 Days at a Bank
In the construction business, clients are always looking for a team of contractors that can get the job done right and fast. When you are in need of financing to complete a project, a bank can make you wait up to 90 days to receive funds.
If you halt completion of your project due to lack of funds, your client is likely to move on to someone who can complete it. This will not only leave you without payment for your completed work, but will also hurt your business’s reputation.
4. Your Employees Need To Be Paid
Starting a job with low cash flow can be dangerous. If you only have enough financing to complete your project and not to pay your employees, you will have a group of very upset individuals on your case.
Not only will late payroll upset your employees, but it can also lead to costly legal issues. With construction factoring or payroll factoring, your business will now have the resources to completely finish projects and pay your hard working employees on time.
5. Clients Expect The Best
Your clients expect the best. When you are low on cash flow, you can’t give it to them. Ensure that you are giving your clients exactly what they need and want by securing your business’s capital.
By doing so, your clients will see the quality in your new business and may recommend your services to their friends and family.
Construction factoring is a great financial solution for subcontractors. You will be able to control your cash flow to successfully complete jobs and allow your new business to grow.