• 5 Secrets About Getting Construction Finance

    The construction sector has been notoriously difficult to finance due to the the many issues that tend to come as part and parcel of working within the sector. These are problems such as stage payments, raising applications for payment instead of invoices, having complicated contracts with main contractors, to mention but a few.

    There are a number of financiers that are specialists in funding the construction sector, but there are still many misunderstandings about the various nuances of the finance that is available. There are many aspects that remain unknown although the financiers would like you to know about them.

    5 Secrets About Getting Construction Finance

    Below we have shared 5 secrets about getting construction finance:

    1. You Can Get Funding Against UNCERTIFIED Applications For Payment - financing applications for payment (which 75% of the trade use instead of invoices) often requires the the applications to be certified by the debtor. This narrows the period of funding significantly, to maybe a few weeks. However, it is possible to get finance against uncertified applications for payment, significantly accelerating the stage in the process at which you can access finance.

    2. Construction Finance Can Fund Single Debtors - man businesses start out with just one customer. If you only have one customer you may want to read our Top 5 Tips If You Only Have One Customer, but you may also be surprised to know that you can get funding against transactions to a single customer within the construction sector, with no prime debtor restriction. Not all funders can offer this.

    3. It Can Be Confidential - if you are worried about customers becoming aware that you are using finance against your applications or invoices you may prefer a confidential arrangement - however you may also still want the credit control benefits that come with factoring. Confidential factoring for construction projects may be a great option in that situation, and it does not require you to have the same level of accounting process automation that you may need to qualify for invoice discounting. Confidentiality can also help you get funding against contracts that include a "ban on assignment" clause (which prohibits an invoice being assigned to an invoice finance company).

    4. You Can Get Finance Against Final Accounts - the final account is often the last 10 to 15% of a construction contract that is invoiced at the end of the job. Often a main contractor might seek to achieve a price reduction by asking for this to be wiped off. In view of this, it is often not funded by financiers. However, you can get finance against final accounts providing they are either certified or confirmed e.g. by email, from the main contractor.

    5. You Can Finance Civil Engineering Projects - can be a difficult sector to get funded due to design obligations. However there are specialist that have successfully funded against civil engineering projects. This is done by using a Quantity Surveyor to understand the contract and the design obligations, so that the level of prepayment can be set at an appropriate level.

    Share with:

Related articles

  • Read More

    Late Payments Expected In The Construction Sector

    Construction companies are bracing themselves for a wave of late payments, as a result of the uncertainty around Brexit and the UK economy.Our recent late payment study found that the construction sector was one of the industry segments expecting to be worst hit as a result of Brexit (Britain leaving the European Union in March 2019). The extended timescale with the proposed exit is an issue in...

  • Read More

    Construction Financing For Contractors

    We are trying to raise awareness of construction financing for contractors which is a little known form of finance available to UK subcontractors in the construction sector. Any help you can give us by sharing our post about this is much appreciated.We researched the need for this type of gap funding. Three quarters of sub-contractors that we polled that raised applications for payment, 85% of...

  • Read More

    Finance For Construction Company In CVA

    Finance for a construction company that's in CVA (creditor's voluntary arrangement)? Most financiers would say "no thank you" but we have partners that can help.It's common when a company has financial problems, or a poor credit history, to just assume that you won't be able to raise any finance from anywhere. Everything these days seems to revolve around having a clean credit history, and a...

  • Read More

    Solving A Single Debtor Credit Limit Issue For A Construction Sector Company

    We have just been able to help a construction sector company solve a cash flow issue by getting funding against their single debtor. We were able to find them a credit limit that was several times larger than other funders were able to offer.I wrote recently about our success in helping customers with funding limit problems, and this case was a similar example of how we are able to overcome...

  • Read More

    The Reasons For Non-Payment In The Construction Sector

    A recent study by Bibby Financial Services identified the reasons for non-payment in the construction sector.On average the survey found that amongst the construction firms surveyed, they wrote off nearly £51K, over the last 3 years, where customers either failed or were unwilling to pay.Of the 250+ construction subcontractors that were interviewed, 27% said that "late payment" was the biggest...

  • Read More

    The Pitfalls Of Construction Contracts

    Futher to my recent post "Understanding Construction Contracts" I have been reading an interesting piece of research, from Bibby Financial Services, that reveals just how much of a problem contracts can be to subcontractors within the sector.There were a number of pitfalls of construction contracts that were identified in the survey.In addition to affecting your ability to get paid, contractual...

  • Read More

    Help Understanding Construction Contracts

    There are a number of financiers that handle the construction sector and will be able to provide you with finance against applications for payment. The sector is widely subject to contractual terms, and these contracts are normally provided to the subcontractor by the main contractor.However, often contracts are signed without the subcontractor really understanding their obligations, and this...

  • Read More

    Construction Finance For A New Startup Company

    Recently FundInvoice has added a lot of help and information for construction sector businesses that are looking to raise finance. We have just been able to help a new startup company, which is projecting turnover of £500,000 over the next year, within the construction sector.The company operates as a sub-contractor, providing electrical and mechanical engineering services to the main contractor...

  • Read More

    Finance Against JCT Contracts

    At a meeting with one of our construction finance partners recently, they spoke of their ability to provide finance against JCT contracts (the Joint Contracts Tribunal produce standard forms of contract for the construction industry, that can be modified in some cases). It struck me how far the industry has come since I started in factoring back in 1988.Anything contractual was a "no no" back...

  • Read More

    Price Of Construction Finance Against Applications For Payment

    An example of the pricing for a #construction finance deal has been added to the #FundInvoice site. Pricing will vary depending upon your particular circumstances but it gives you an example of the pricing for a reasonable sized client: Construction Finance Pricing...

  • Read More

    Demand For Construction Sector Labour Falls As Costs Rise

    An #construction sector article by the London School of Business quotes KPMG and Markit research as showing the lowest demand for workers in the construction sector since May 2015. The article also points out the rise in staffing costs, which will undoubtedly being putting additional pressure on the cash flow of construction companies.Slow payments still plague the construction sector, and our...

  • Read More

    Construction Sector Finance Against Applications For Payment

    A new video explaining construction finance against applications for payment:...

  • Read More

    Construction Finance Updated

    I have just updated the Construction Finance section of our main site to include case studies, articles and news stories. We will shortly be adding some more examples of costings: Construction Finance...

  • Read More

    Construction Finance Growing Number Of Funders Available

    One of the sectors receiving growing levels of funding from the invoice finance sector is the construction sector. A growing number of invoice finance companies have extended their product ranges to offer construction finance. Many construction businesses don't realise that you can receive finance against applications for payment, including those that are uncertified: Construction Finance...

  • Read More

    Construction Finance Against Applications For Payment

    Many construction sector businesses do not raise invoices for payment, rather they present an application for payment. This can be an issue for many invoice finance companies as can the contractual nature of the construction industry. Construction finance is the alternative.There are now a number of finance houses that handle construction sector businesses, with funding provided against...

  • Read More

    Alternative Finance For Construction Projects For Construction Companies

    We had an interesting meeting with a provider over the last few days who have moved into finance for construction projects in addition to mainstream invoice finance deals. They will provide funding to construction sector businesses either against applications for payment or invoices depending upon the method of operation. This increases the options for clients as this kind of alternative finance...

  • Read More

    New Article About Construction Project Finance As An Alternative To Bank Loans & Overdrafts

    I have just published a new article on the FundInvoice site about Construction Project Finance as an alternative to using bank loans and bank overdrafts to finance construction sector projects. You can read the article here: Construction Project FinanceThis type of finance is very specialist and there are a limited number of construction finance companies that offer such facilities. However it...

  • Read More

    New Trade Finance & Construction Finance Pages Added

    I have added new pages to the blog, one about Trade Finance and one for Construction Finance - two of the niche commercial finance products that we can help businesses find.Trade Finance - is finance for importers who are importing shipments of goods into the country: Trade FinanceConstruction Finance - is sector specific finance for construction sector businesses: Construction Finance...

  • Read More

    Deal Completed - Construction Finance For A Group Of Companies

    We were recently able to assist a large group of construction sector companies that were finding their existing bank overdraft restrictive and they needed greater levels of working capital in order to grow and expand their construction sector business.We found them a construction finance facility that was able to release a further £250,000 of funding for the group in order to fund their growth...

  • Read More

    64% Of Construction Sector Businesses Would Benefit From Funding Against Uncertified Applications For Payment

    Just noticed that I hadn't published this interesting result from our #constructionfinance research survey. 64% of Construction sector businesses say that they would benefit from receiving funding against Applications For Payment that have not yet been approved - I have previously expressed that as a percentage of just those that raise applications for payment (85%) but not as a percentage of the...

 

 

Examples of just a few of our finance partners:

castle
catalyst
marketinvoice
hitachi
leumi abl
lloyds bank