Construction factoring helps contractors, subcontractors, and construction companies maintain cash flow despite the industry's notoriously slow payment cycles. With typical payment terms of 60-90 days and retention holdbacks, construction businesses often struggle to fund ongoing operations.
The Construction Cash Flow Challenge
Construction businesses face unique cash flow pressures:
- Long payment cycles (60-90 days is common)
- Retention holdbacks (5-10% held until project completion)
- Material costs often due upfront or COD
- Labor costs are ongoing throughout projects
- Multiple projects at different stages create complexity
- Seasonal fluctuations affect revenue timing
How Construction Factoring Works
- 1You complete work and submit payment applications
- 2You submit approved invoices to your factoring company
- 3The factor verifies the work and customer creditworthiness
- 4You receive 70-90% of the invoice value (excluding retention)
- 5Your customer pays the factor when the invoice is due
- 6You receive the balance minus factoring fees
Need cash flow for your projects?
Check your eligibility for construction factoring.
Construction Factoring Rates
Construction factoring rates typically range from 2.5-6% depending on several factors:
- Type of customer (general contractor, commercial, government)
- Project size and complexity
- Your experience and track record
- Volume of invoices factored
- Length of payment terms
What Can Be Factored
- Completed work invoices and payment applications
- AIA payment applications (G702/G703)
- Subcontractor invoices to general contractors
- Commercial project invoices
- Government construction contract invoices
What Usually Cannot Be Factored
- Retention amounts (until released)
- Progress billing for incomplete work (in most cases)
- Residential construction invoices
- Disputed amounts or work under warranty claim
Benefits for Contractors
- Pay for materials without waiting for client payment
- Meet weekly payroll for crews
- Take on larger projects without cash flow constraints
- Bid more competitively with better cash position
- Build supplier relationships with faster payment
Get Started
Factoring Express works with general contractors, subcontractors, and specialty trades across the construction industry. We understand AIA billing, retention, and the complexities of construction payment. Call 855-767-7771 or check your eligibility online.