Construction
Do you own a business in the world of construction? Is waiting for your invoices to be paid slowing your work down? Here’s how invoice finance could be the answer…
Contents
- How can invoice finance help within the construction industry?
- How does it work?
- A real-world example
- What to do next
Benefits of Invoice Finance in the Construction Industry
It is the same scenario you see time and time again – you have completed the work, sent out your invoice and then you may need to wait 30, 60 or even 90+ days to receive those funds. Your growth is halted; if you had received the funds immediately, you could be purchasing new materials, machinery, hiring new staff and taking on more jobs.
This is where an invoice finance facility could help. Instead of waiting for and chasing your debtors to pay, you could receive up to 80% of your invoice value that same day. So, how does it work?
Step-by-step guide to invoice finance
- Send your invoices
Firstly, you send your invoice to your customer, and another copy to your chosen lender.
- Receive up to 80% of the invoice value
Depending on the terms agreed, you will receive up to 80% of the upfront invoice value on the same day as when you issued the invoice.
- Your customer pays their invoice
Your customer pays their invoice within the agreed terms of 30,60 or 90 days.
- You receive the remaining 20%
Once your customer has paid their invoice, you will receive the remaining 20% of the invoice minus the lender’s fee.
A made-up example: Build Me Up Ltd
Build Me Up Ltd have completed work on a property renovation and send an invoice of £10,000 to their customer. They expect the invoice to be paid after 30 days from the end of the month. In the meantime, BMU Ltd receive a phone call offering work on another site the following week – but they don’t have the cash flow to be able to pay their staff or buy the supplies they would need to complete the new job.
Fortunately, BMU Ltd have an Invoice Finance facility. They send a copy of the invoice to their lender and receive £8,000 that same day. They can hire their staff ready for the week ahead and purchase the materials they need. After 30 days, the lender receives the invoice payment and sends BMU Ltd the remaining £2,000 minus their fee.
Having the Invoice Finance facility has meant that Build Me Up Ltd have been able to grow their business incredibly fast compared to if they were having to wait to be paid for the work they had already completed.
How do I get an Invoice Finance facility?
This is where Contact Business Finance comes in! We have a wealth of knowledge in the world of Invoice Finance and can put you in touch with the most suitable lender. In a free-of-charge service, we will compare the market for you to find what would be best for you and your business.
And it’s not just Invoice Finance we can help with – we can look at business loans, asset finance, trading finance and more.
