Buying construction equipment can be expensive. Fortunately, there are a number of financing options. One option for your business may be factoring. This form of short-term financing can help you to get what you need with a relatively flexible and affordable type of lending. Understanding how it works could help your business to run more smoothly.

Factoring in the Construction Industry

Factoring is a way to get capital for your business that involves selling your accounts receivable at a small discount. It is a good way to get paid upfront rather than waiting for customers to settle their balances. If you have receivables that are interrupting your cash flow, this may be a good option for you.

Typically, a factoring company will pay you and then collect from your customer. This means that you can get money even if you have imperfect credit because the decision is based on your customers’ credit.

In the construction industry, this can be a little more complex due to the terms of many contracts. However, there is the potential to get paid significantly earlier than would otherwise be the case. You can leverage your guaranteed payments from customers to get financing.

How It Can Help With Equipment

What happens if you need to invest in equipment to complete a job? You could take out an equipment loan. However, that may mean making payments when you haven’t been paid by your customer. A better option could be to use factoring. This could help you to get the money for the job earlier so that you can buy the equipment you need.

This is also a great way to ensure that you have all the supplies you need. Alternatively, if you just need a little extra cash to buy some equipment, it may be a good way to top up your coffers using your receivables.

Is This Right for You?

This can be a good option for a lot of businesses. However, it is not right for everyone. It can be especially advantageous if you have customers with great credit. It also helps when you have a lot of receivables. Speak with some factoring companies to determine if it may be right for you.

Get Started

If you want to pursue this form of financing, get started today. It could help you with your construction equipment costs and other expenses. Learn more about factoring in the construction industry.