Why construction needs specialist invoice finance
Standard invoice finance providers often decline construction businesses because the invoicing structure does not fit their standard model. Applications for payment, applications on account, and invoices subject to retention are not the same as a straightforward commercial invoice for completed goods or services.
Specialist construction lenders understand the JCT and NEC contract structures used across the industry. They are comfortable funding applications for payment before a formal VAT invoice has been raised, and many will fund retention values once they become releasable.
What can be financed?
Depending on the lender, construction finance can cover a range of document types including applications for payment, interim certificates, final account certificates, and domestic sub-contractor invoices. CIS (Construction Industry Scheme) invoices can also be funded by specialist providers who understand the tax structure.
- Applications for payment (Applications on Account)
- Interim payment certificates
- Final account settlements
- Domestic sub-contractor invoices
- CIS invoices and self-billing arrangements
- Retention balances (on selected facilities)
Benefits for construction businesses
Construction companies often work on long projects with extended payment cycles. Specialist invoice finance bridges the gap between doing the work and receiving payment, enabling contractors and sub-contractors to fund ongoing labour, materials and plant costs without relying on overdraft facilities.
Eligibility
Eligibility criteria for construction invoice finance are broadly similar to standard invoice finance, with some sector-specific additions. Lenders will want to understand the contract types you work under, the proportion of your work covered by retention, and your sub-contractor structure.
Eligibility
- UK limited company engaged in construction, civil engineering, or specialist contracting
- B2B contracts only (domestic residential projects have limited eligibility)
- Minimum 12 months trading history
- Evidence of contract and work completion to support invoices
Frequently Asked Questions
Can I finance applications for payment before a formal invoice is raised?
Specialist construction lenders can fund applications for payment. Standard invoice finance providers typically require a formal VAT invoice, which can create a timing mismatch in construction.
Will a lender fund my retention balances?
Some specialist providers will fund retention balances once they become due for release under the contract. Not all lenders offer retention financing; it depends on the facility and contract structure.
Are CIS invoices eligible for invoice finance?
Yes, with specialist lenders who understand the CIS structure. The lender needs to account for the tax deduction at source, which changes the net value of the invoice.