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Staffing factoring for construction companies addresses cash flow problems resulting from the slow, incremental payment schemes that are very common in construction. Many even consider it a good business practice to give clients long payment terms given the nature of the industry and the high costs that construction projects often entail. Construction companies face similar challenges, which also explains the need for staffing factoring for laborer companies.
Through construction and laborer staffing factoring, construction and labor services companies can fill gaps in their cash flows created by slow-paying clients. Factoring companies will pay construction and laborer companies an advance for those invoices. In exchange, factors keep a small percentage of the invoice as their service fee.
The benefit of construction and laborer staffing factoring is that companies can monetize their invoices without waiting weeks or months before getting their full payment. Construction and laborer companies will resultantly have enough cash flow to accept new clients and take on large projects through staffing factoring.
Factors can purchase a few invoices (spot factoring) or all invoices (full-turn or whole ledger factoring). In addition, construction and laborer companies can use staffing factoring temporarily (only when the situation calls for it) or permanently (officially unload the burden of getting clients to pay their debts to factors).
Staffing factoring for construction companies and labor agencies includes four simple steps:
- Step 1: Submit a copy of the invoices to the factor.
- Step 2: The factor verifies the invoices and conducts credit checks on the clients who owe the construction or laborer company.
- Step 3: The factor pays the advance for the invoices.
- Step 4: Once the clients settle their invoices, the factor retains their fees (also known as the discount rate) and sends the remainder of the reserve (or the deposit) to the construction or laborer company.
Staffing factoring for laborer companies and construction firms ensures that these companies can continue running their business without a hitch. As a short-term financing option, it provides companies money-on-hand that they can use to pay their employees’ salaries and operating expenses on time. More importantly, staffing factoring brings in working capital that enables these companies to hire more people, guarantee their payroll, buy new equipment, and cover upfront costs of accepting new and larger projects. As a result, construction & laborer staffing factoring can be instrumental in company growth.
In addition, staffing factoring is the best financing option for construction and laborer companies whose past financial difficulties are reflected in their credit histories. Banks quickly reject loan applications from businesses with poor credit ratings, but factors confidently provide invoice advances to construction and laborer companies. This is because they don’t look at the company’s credit history but the creditworthiness of its clients who need to settle the invoices.
Why should you seek out staffing factoring for construction companies and laborer servers? Here are some of the advantages of getting financing through staffing factoring:
- Even if your credit history isn’t impressive enough to banks and traditional lenders, you can get working capital.
- You can cover existing payroll and hire new, seasonal workers if your clients’ staffing needs increase with short notice.
- You can attract highly-skilled professionals with competitive salaries.
- You’re not at the mercy of your clients’ timeliness in paying their invoices.
- You can monetize your invoices within two to three days.
- With our online account management system, you can track your advances and other receivables.
Staffing factoring for laborer companies and construction firms offers higher advance rates than other industries. Our advance rates can go as high as 96 percent here at Business Factors. The remainder of the invoice is set aside for the discount rate and the reserve. The discount rate typically includes the service charges, while the reserve is a deposit that covers the cost of factoring an invoice.
To determine how much you’re going to pay for staffing factoring, consider this example:
- Invoice amount: $10,000
- Advance rate: 90% or $9,000
- Reserve: 10%, or $1,000
- Discount rate: 2.19%, or $219 every 30 days
- Type of arrangement: Non-recourse
If these are the terms of your factoring agreement, you’ll get $9,000 within two to three days of factoring. If the client clears the invoice in one month, the factor keeps $219; and if it takes them two months, the factor can claim $438 ($219 x two months). Since the reserve is $1,000, there will be a remainder of $562 if the client pays after two months. The factor will send you this remaining balance.
At Business Factors, we offer non-recourse factoring, which means that businesses don’t pay penalties or extra fees if their clients don’t pay the invoice. We carry the biggest risk in this arrangement so that you can get the maximum value of your accounts receivables and be relieved of the stress of going after clients who owe you money.
Lastly, we determine the discount rate based on considerations like the volume of invoices you want us to factor, the average amount of the invoices, your clients’ credit ratings and histories, and the average length of time it takes your clients to pay their invoices.
It helps to know all of your options for financing so that if staffing factoring isn’t possible, you can still get working capital for your business. Business Factors offers a wide range of short-term financing options, such as revenue-based and asset-based loans. We urge you to pay close attention to the terms of your working capital loans and avoid signing predatory contracts, like confession of judgment (COJ) documents (a COJ gives a lender the right to take you to court without your knowledge).
We can help you find alternative financing options to solve your cash flow problems. Call us, and our friendly team will help you determine which alternative financing suits your business the best.
Here are some excellent reasons to bring your invoices to Business Factors for staffing factoring:
- Available 24/7, all year round
- Quick and easy procedure
- Get advances of up to 96 percent
- Receive advances in 24 to 48 hours (if your cash flow problem needs a solution now, construction & laborer staffing factoring is the best alternative)
- Non-recourse factoring arrangement
- No hidden fees
Construction & laborer staffing factoring provides construction and laborer companies with working capital to finance their day-to-day operations and embark on new, bigger projects that can grow their business. In addition, staffing factoring monetizes unpaid invoices: companies in the construction industry won’t have to wait for late-paying clients to pay their debts to get working capital. Moreover, the staffing industry enjoys a high advance rate on average compared to other industries. Factor advances range between 60 to 90+ percent, and staffing factoring is in the higher averages compared to retail, for example.
Lastly, Business Factors provides alternative working capital loans besides construction & laborer staffing factoring. Contact us, and we’ll be happy to help you find a suitable solution for your immediate financing needs.