Finding finance is difficult for any business. However, if you are in the construction industry, it tends to be even harder. Most construction businesses have much of their cash tied up in land, property and materials. Their overheads are quite high, with large crews to pay, as well as vehicles and plant to run. A lot can go wrong in the construction industry, so deadlines can easily be missed and finished properties can take a long time to sell.
Unsurprisingly, many lenders consider lending to constructors as high risk, so borrowing money is sometimes difficult. However, invoice finance for construction is a viable way to secure a loan.
For whom is invoice finance for construction suitable
The great thing about invoice financing is that it is a viable way for virtually any construction firm to raise money. That money can be used to carry a firm through lean times or give them the cash they need to take advantage of a business opportunity. For example, provide the cash to buy the building materials or hire the plant needed for a new job. At some point, virtually every building firm could make use of extra cash.
Most firms have outstanding invoices. This means that invoice finance is a form of borrowing that the vast majority of construction or building firms can access.
How it works
The process is simple. If a firm is owed money by a client, they can use their invoice as collateral for a loan. Once the client pays the invoice, the money borrowed is paid off along with the fees for the loan.
How much can be borrowed varies depending on the amount owed and who owes it. It is possible to borrow up to 90% using invoice financing. In other words, a firm owed £2,000 by a customer could potentially raise £1,800 against that invoice.
The whole process is simple and, importantly, is extremely fast. It is possible to borrow against multiple invoices owed by a single client or across invoices from a range of clients.
A business does not necessarily need a pristine credit record to take advantage of this borrowing vehicle. It is also a relatively inexpensive way to borrow money for a short period.
Getting access to invoice finance for construction
At Invoice Finance Scotland, we offer a range of ways for construction companies to borrow money, including invoice financing. For construction companies or independent builders, as well as large refurbishment and building maintenance firms, our services are very suitable and can be tailored appropriately.