Why Invoice Finance works for construction companies
Construction is a cashflow-critical industry, and that’s the primary reason why Invoice Finance, a way of releasing the value of unpaid invoices, works so well.
Working in the construction sector, you will most likely face financial challenges such as delayed payments and substantial upfront costs, driven by long construction project cycles. Invoice Finance can help to support your business through these cycles.
Add the rising cost of raw materials, supply chain blockages causing shortages, and a lack of skilled labour, and it’s easy to see why Invoice Finance is an effective and vital financial solution that provides the liquidity and flexibility to sustain operations and fuel growth.
So, what is Invoice Finance, and how does it work for construction companies? Here are the top facts.
Construction Invoice Finance
Invoice Finance allows your company to release a percentage of the value of your unpaid invoices. But Construction Invoice Finance goes further, enabling you to receive cash against both certified and uncertified applications (approval status) for payment and certified invoices raised at project completion.
It also provides funding that reflects your project’s critical stages, allowing you to place orders earlier, pay suppliers upfront for better negotiation power, and promptly obtain the materials you need. Plus, you can grow your Construction Finance funding line as the project or company expands.
How Construction Finance Works at Bibby Financial Services
Construction Finance will work differently at different financial institutions, but at Bibby Financial Services, this is how easy it is to unlock the value of your unpaid construction invoices.
Construction Finance helps by paying you a percentage of your application for payment and invoices within 24 hours of them being submitted:
- Complete the current stage of your project.
- Upload your uncertified and certified applications for payment and certified invoices to our client portal.
- A percentage of your application for payment or invoice will be available as cash within 24 hours.
- Protect yourself against non-payment of invoices or insolvency. Bad Debt Protection protects up to 90% of your bad debts or against customer insolvency.
- Your customer pays us, and we deduct what you owe, including pre-agreed fees. You then receive the remaining amount.
Benefits of Construction Invoice Finance
If you dig a little deeper into the benefits, you will see that Construction Finance solves many challenges, not least freeing up time to focus on completing the project.
Release Cash Within 24 Hours
Construction projects often involve significant upfront costs, from purchasing materials and equipment to paying skilled labour. Invoice Finance allows your company to receive an immediate cash injection, bridging the gap between completing a project and receiving payment from clients.
Overcoming Overdue Invoices
Construction projects are notorious for payment delays, which can disrupt cashflow and make taking on new projects difficult, stemming growth. Invoice Finance provides a structured solution to release the value of invoices early, making it more financially viable to plan and commit to future projects.
Flexibility
Invoice Finance offers flexibility in funding, as the funding grows in line with your turnover. With a solution that meets your specific needs, you have the financial resources required to tackle projects simultaneously.
Manage Credit Risk
By working with a construction finance partner, you have someone to consult when considering a new project, which can help mitigate the risk associated with client payments. From taking out bad debt protection to conducting due diligence when working with a company, you can assess risk together.
Working Capital Management
Efficient working capital management is crucial. Invoice Finance helps optimise cashflow and allocate resources more effectively so you can seize new opportunities when they arise. It also provides reassurance that regular obligations such as payroll and day-to-day operational costs will be met.
Scalability and Growth
As you take on larger and more complex projects, scalable financing becomes paramount. Construction Finance is inherently scalable, allowing you to increase or decrease the volume of invoices you factor based on your current needs so that you can confidently grow the business.
Find out more
Invoice Finance can be a game-changer for your construction company if you’re seeking to navigate the financial challenges inherent to the industry as it empowers you to focus on what you do best — building the future.
As the construction industry evolves, embracing innovative financial solutions like Construction Finance will ensure sustained growth and success. Call 0808 501 6610 to see how Bibby Financial Services can support you.
