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Construction

16 Sep

Spot Invoice Discounting »

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We have recently been contacted by a company offering spot invoice discounting. I was very excited as we often get requests from businesses looking to discount a single invoice on a confidential basis. I thought that this was the solution.

In essence it is badged up as invoice discounting because the client does the credit control. In fairness the same could be said about spot factoring. The credit control is also done by the client. In both spot factoring and spot invoice discounting the customer/debtor is required to pay the lender directly.

Unfortunately, to my knowledge there is not confidential spot factoring or spot invoice discounn available as I type.

If anyone know different please let us know.

 

02 Aug

Architects Confidential Invoice Finance »

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Architect Invoice Finance

Architects can now access confidential invoice finance.

At Funding Solutions we have helped several architects raise invoice finance but typically it has been on a disclosed basis and supported by substantial personal guarantees.

We now have a specialised product aimed architects. This offer valuable working capital and is confidential so clients are never aware.

For more details contact us on 0845 251 4040

13 Apr

Single Invoice Factoring »

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Single invoice factoring, often called spot factoring, is available via Smart Factoring Quotes.

If you are looking to factor a single invoice or a batch of invoices this is possible. Traditional factoring and invoice discounting facilities typically require a lengthy contract that will attract a service fee whether you use the facility or not.  Spot factoring attracts a simple charge which is a small percentage of each invoice and you can pick and choose when to use the service and which invoices you finance. The big advantage compared to traditional invoice finance facilities is the flexibility – you can access cash when you need it rather than being tied in to lengthy contracts that require every invoice to be notified.

How does spot factoring work?

The spot factoring lender purchases your chosen invoice at a discount providing you with the cash you need to buy new stock, pay wages or pay suppliers. When the invoice is due your customer pays the spot factoring lender in full. The spot factoring lender will provide you with the balance that they owe you less their charges.

Criteria For Spot Factoring

Spot factoring is available to most businesses that sell to other businesses on credit terms. You could access spot factoring even if:

  • you are a fairly new start business
  • you are in the construction sector
  • you have had recent credit issues

The focus is really on the financial strength of your customer. Are they able and willing to pay for the goods or service that you have provided?

What is the process in applying for spot factoring?

  • Once you have spoken to Smart Factoring Quotes and selected a suitable spot factoring provider you would make contact with them.
  • The spot factoring lender would undertake some simple due dilligence which will take a few days.
  • Then you can choose some invoices to for the spot factoring company to purchase.
  • The debtor named on each invoice would be checked for credit worthiness.
  • The spot factoring company would also check that the sale described on the invoice had been completed satisfactorily.
  • Upon completion of these checks the debtor is advised that the spot factoring company has purchased the invoice.
  • You are then paid for the purchased invoice or invoices.
  • When the invoice is due the debtor pays the spot factoring company directly.

Benefits of Spot factoring

  • leaves you in control of your business as you can choose which invoices you finance
  • flexibility
  • cost effective way of accessing working capital in an ad hoc manner
  • fast and flexible service
  • available to the construction sector

If you are considering Spot Factoring contact Smart Factoring Quotes on 0845 863 0738

07 Mar

Applications for Payment »

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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 »

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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 »

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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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