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
