Construction factoring is a type of invoice factoring that is specific to the construction industry. When a construction company needs to get paid for the work they’ve done, but doesn’t have the cash on hand to wait for the client to pay their invoice, they can use construction factoring. 

The construction factoring company will give the construction company a percentage of the invoice value upfront, and then the rest once the client pays their invoice. This allows the construction company to continue operations while they’re waiting for payment from their clients.

Choosing A Construction Factoring Company: Best Practices

Consideration 1: What Do They Charge?

There are a few things to consider when choosing a construction factoring company. The first is the fees that the company charges. Some construction factoring companies will charge a flat fee, while others will charge a percentage of the invoice value. Be certain to compare the fees charged by different construction factoring companies to make sure you’re getting the best deal.

Consideration 2: Speed of Operation

One more factor to consider is the turnaround time. When you factor in an invoice, you’re essentially selling it to the construction factoring company. The company will then wait for your client to pay their invoice before they give you the rest of the money. Some construction factoring companies have a quicker turnaround time than others, so you need to find one that can get you your money as soon as possible.

Consideration 3: Do They Have a Solid Reputation?

Finally, you’ll want to consider the reputation of the construction factoring company. Make sure to read reviews and check out official, widely-recognized vetting organizations such as the Better Business Bureau website and check if the company is in good standing. You should also check to see if the company is licensed and insured. Choosing a reputable construction factoring company will give you peace of mind and help you avoid any potential problems down the road.

The above represents just a smattering of the considerations you need to make before picking a good company for your construction factoring designs. Even better, you can consult with experts in the area – such as those at Critical Capital Solutions. They can give you a deep dive into the most salient aspects of factoring companies; just contact them at your earliest convenience on their website.