Applications For Payment | Invoice Factoring Forum

Stories Tagged ‘applications for payment’

07 Mar

Applications for Payment »

Invoice Finance companies will typically not provide finance to companies in the construction industry that raise applications for payment. However, at Funding Solutions we have been finding finance for such companies from the very outset. Clients of ours include scaffolding firms, tiling contractors, roofing contractors and various other construction related businesses. If you are looking for finance against applications for payment then call us on 0845 251 4040.

Part of this is because they cannot actually take assignment of an application as it is not a legal document whereas an invoice is.

Invoice factoring companies also become nervous about the variance between the application and the final invoice. They will always consider the risk that the final invoice may be much less than the original application.

Another issue that is considered is the contractual nature of the debt. Typically construction work of any kind is supported by a contract and within that contract will be ‘offset clauses’ and ‘liquidated damages clauses’ that can impact on the value of any outstanding debt. This means that in a failed situation the invoice finance company may not recover the value of the applications or invoices.

At Funding Solutions we aim to understand each individual business that we deal with. Rather than turning our back on the construction industry we have aimed to understand it and along with our knowledge of invoice finance we have aimed to find solutions for businesses with cash flow issues.

27 Sep

Scaffolding Invoice Factoring »

by Invoice Factoring Forum

We have several invoice factoring clients who operate in the scaffolding industry. They have always found it difficult to find invoice factoring companies who want to lend to them because of the industry that they operate in. However, as an industry scaffolders require cash flow finance because the house builders are slow to pay yet wages need paying weekly. On top of that funding for tubing is hard to come by and often has to be hired in at high rates or bought for cash which only compound the problem.

So why don’t invoice factoring companies like funding scaffolding businesses? A major issue is that like other construction contractors they submit applications for payment rather than invoices. This can usually be overcome though. Another issue is that applications or invoices are raised in stages. This means that in the event of failure the invoice factoring company could be funding a part finished job which will not be completed. They are unlikely to get paid for this and as such would not recover ther money. Any contract underpinning the work will almost always be subject to a liquidated damages clause and as such the makes the likelihood of getting paid for a part finished job even less.

So what is the solution if you are looking for scaffolding invoice factoring? Smart factoring quotes work with several lenders who are happy to finance scaffolding forms. They have developed a more in depth understanding of these companies and as such are better equipped to provide the finance.

22 Aug

Construction Factoring »

by Invoice Factoring Forum

Construction Factoring is challenging for invoice factoring companies for a number of reasons.

Any invoice factoring company wants to know that the value of any invoice that they have funded against is secure. In the event of business failure they want to be able to approach the clients customer and request that the invoices they have taken good title to are paid in order to recover their position.

With this in mind if you consider how the construction industry operates you will see how this can cause issues for invoice finance companies.

In the first instance most contractors within the construction industry raise ‘applications for payment’ rather than invoices. As such invoice factoring companies cannot take good title to the applications in the traditional manner.

The work done is usually measured weekly, monthly or against specific milestones and as such applications or invoices are raised for a part completed project. Should the contractor fail to complete the project then liquidated damages can come into effect which render the outstanding invoices worthless. As such any invoice factoring company would not recover their position against these invoices.

Retentions at the end of the contract can also cause issues for invoice finance companies but these effect the prepayment level rather than the ability to provide funding.

Bad news for the construction contractor looking for a flexible working capital facility? Well, it is not all bad news. Smart Factoring Quotes have lenders who can provide invoice finance facilities to construction contractors. Get in touch today.

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Stories Tagged ‘applications for payment’