Are a construction company's receivables 'factorable'?
Even those receivables that are from completed jobs - therefore not the 'work-in-progress' receivables that could have collection issues?
If there are factors out there, I would like to learn of them, along with any other tips on accounts receivable financing.
Thanks!
Is factoring even possible for a construction company's receivables?
Answers
Before the Great Recession almost anything was factorable or securitizable. GMAC used to have a construction lending business line that I believe has been wound down.
Since the Great Recession commercial / construction credit funding has dried up. Doubt there are many out there who would provide liquidity for this right now, if they did it would probably be at a pretty steep haircut.
I work with a fair number of construction companies that use factoring. There are only a small percentage of all factoring companies that will work with bonded progress billings.
The key is the GC or owner must sign an estoppel letter promising that they will not offset future payments based on past performance.
Advance rate on construction is usually 75% (net retainage).
I will be happy to chat with you and based on my knowledge of the construction factoring industry make a referral for you.
I can put you in contact with someone in factoring that specializes in construction. Let me know if you are interested.
Compound Profit, has a financing source that specializes in factoring publicly funded construction projects. We also do general
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