How can Factoring assist Construction Companies or Subcontractors?

Finding business financing for any small or medium sized company in the construction industry can be a challenge. As an industry, construction has always been difficult to finance. This is partly because each contract is a risk since many things can go wrong. Also, each contract can have many players: the project owner, the general contractor, the subcontractors and the financing institutions which increases the financial complexity.

Most construction companies tend to get paid 30 to 60 days after invoicing. This is a common business practice but it can create serious cash flow problems. Few companies can wait that long to get paid and still cover their own payroll, rent and business expenses. Unless the company has substantial cash reserves, it will run into problems. Company managers will often try to cover the cash flow gap with a business loan. However, few companies can qualify for business loans in this financial environment. Institutions will only provide business loans to companies that have well established collateral, have strong management and impeccable financial statements. Few small or medium construction companies meet this criteria.

There is an alternative that is available to most construction general contractors or subcontractors. It's called construction factoring. Factoring solves the cash flow problem by advancing funds against your invoices. Instead of waiting 30 to 60 days to get paid, you get an advance from a factoring company, like River Rock Financial. The transaction is settled once your client pays the balance of the invoice to us.

One major difference between factoring and a business loan is that factoring considers your invoice to be strong collateral. It is tied to your sale, and grows as the company does. Factoring can provide cash flow to companies who cannot afford to wait up to 60 days to get paid by clients. Remember, factoring is NOT a loan and you will not incur any debt or affect your hard earned equity.

Giving Your Business The Strength Of Cash Flow To Succeed!

www.riverrockfinancial.ca

Factoring FAQ's

Why Factor?

Factoring can accomplish a number of desirable results. The most basic is having an improved cash flow. Strong cash flow can enhance the growth of your business, making it possible to expand without having to take on debt.

What does a stronger cash flow do for me?

Stronger cash flow enables businesses to meet payroll obligations, satisfy operating overhead, take advantage of supplier discounts and establish good credit for future business plans. These advantages explain why factoring has become a valuable tool for small to medium sized businesses in many industries.

Will my customers believe that I am experiencing financial difficulty if they find out that I'm using a factor?

No. River Rock Financial handles your invoices in a discreet and professional manner, thus making it appear as if we are an extension of your organization. Most informed business professionals today are aware that factoring is a common financial tool used successfully by companies of all sizes.

If my customers know that their invoices are factored, won't they take longer to pay?

No, often it's just the opposite. If your customer already has their own policy specifying when to pay invoices, it makes no difference who the creditor is. They will adhere to what their usual policy is.

River Rock Financial. Giving your business the strength of Cash Flow to succeed.

www.riverrockfinancial.ca