Construction Receivables (Factoring)

construction fundingConstruction receivables are accounts receivables generated by contracts on construction projects.  These receivables are invoices typically owned by general contractors to sub-contractors or any invoices owed to other construction firms by business-to-business or business-to-government entities.

Construction receivables transactions differ from normal factoring transactions in that construction projects are billed differently. Typically, when a construction job begins, a general contractor is in charge of the entire project, and individual portions of the work are sub-contracted out to others.

Construction receivables are typically billed with “progress billing” because these invoices are often against long-term contracts and payments are made against scheduled progress on the job.

A progress billing is a statement that lists all work that has been completed to date. Contractors bill their customers for one step of the job when it is completed, then bill again when the next step is completed.

A large shopping center or office building would be an ideal candidate, for example. If the project has been contracted by the state or federal government, like a government building or schools, it’s an even better prospect. Any scenario in which the government is the debtor is going to be safer than most, because the government always pays its debts (eventually).

Common projects for construction factoring include:

Government projects – Any government-contracted project, courthouses, government administration buildings, construction at city, state, or national parks, streets and highways, or other publicly funded projects.

Education projects – such as public and private schools, colleges and universities, or other publically funded projects.

Commercial projects – Retail, office, industrial projects with major potential tenants, multifamily projects, apartments and townhomes.

Multifamily projects – Apartments, condominiums and townhomes.

Note: In very special situations a sub-contractor may be able to factor invoices for work performed on Residential projects, but only if the invoice owed will be paid by the general contractor, not the home owner.

Types of business that could use construction invoice factoring include:

Appraisers
Architects
Asphalt and Concrete Finishers
Brick Masons
Cable Companies
Carpenters
Carpet
Ceiling – Drywall
Electrical Contractors
Engineers
Excavators
Expediters
Fire Sprinkler Contractors
Flooring

General Contractors
HVAC
Landscapers
Manufacturers
Paving
Plumbing
Roofing
Security Firms
Space Planners
Steel Fabricators
Supply Houses
Tile Contractors
Underground Utilities
Utility Companies

For additional information contact:

Ray King <> The ProCoach
Phone: 832-615-9124 *  Fax:832-615-9570
Email: Ray@TheProCoach.com