Invoice finance for construction

March 5, 2024
Andrew Knowles

It hurts to look at a pile of unpaid sales invoices, knowing that if your customers paid up right now it would fix your cashflow headache.

Invoice finance gives you that fix. It replaces the pain of unpaid invoices with an incoming flow of cash that you can immediately put to work to grow your construction business. 

Whether you’re a contractor or a sub-contractor, you can use that cash to help your projects go faster. Pay for materials, pay your staff, and settle your other bills so your construction jobs stay on track. You’ve also got more time to think and plan, because those cashflow headaches aren’t taking up precious time and energy.

You know that cashflow can make or break a construction project. Invoice finance (also known as invoice factoring) can help you unlock success, because it releases cash that’s otherwise tied up in unpaid sales invoices.

How invoice finance works for construction

Don’t let long payment terms give you cashflow problems. Take advantage of invoice finance to keep your working capital healthy, giving you stronger cashflow.

Once you have an invoice finance arrangement in place, here’s how it typically works:

Step 1 - You raise a sales invoice, a staged invoice or a payment application, which goes to your customer and the finance provider.

Step 2 - Within 24 hours you receive up to 95% of the cash.

Step 3 - Typically the finance provider collects the balance of the invoice on your behalf.

Step 4 - The outstanding element of the invoice is passed to you after the finance provider has deducted their fee.

The fees for invoice finance are agreed in advance, so you always know what you’re getting. Because our finance providers are familiar with the construction industry, they understand the issues that can impact invoicing and payment processes, both for contractors/sub-contractors and their customers. 

Protect your cash flow with invoice finance

What could you do if you had more cash available in your construction business? So often lack of capital is the limiting factor. Not having enough cash to hand can hold building or renovation projects back from starting, or introduce delays once they’re in progress. 

Invoice finance helps to protect your cashflow. It can also help you to go faster, be more productive and to enjoy the results of your work sooner.

The working capital unlocked by invoice finance can help you pay for staff, plant and materials, all of which you need for your construction work. Unfortunately, customer payment cycles and processes rarely coincide with the need to meet your own financial commitments. Invoice finance provides a handy bridge, allowing you to keep the work going and the projects moving forward.

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How invoice finance can help your construction business

The benefits that come from using invoice finance to boost your working capital include:

  • Less time lost to juggling your cashflow.
  • Extra support with credit control.
  • An ongoing source of working capital.
  • Peace of mind and more control over your business.

You benefit from having the confidence to engage in construction projects without the worry of being hampered by customers that are slow to pay.

How to apply for invoice finance for construction businesses

Any business involved in the construction industry that raises invoices or payment requests on its customers can apply for invoice finance. 

The initial application is quick and straightforward. You give us an indication of how much money you’re looking for and a sense of how quickly you need it. You also tell us what you need the funds for, such as to pay a specific bill, satisfy a tax demand or simply as ongoing working capital.

You can apply for construction invoice finance whatever your credit rating. If it’s poor, there may be some limitations on who is willing to lend to you, but it’s usually possible to raise finance, whatever your credit rating. 

If you’re looking for more cash to support your construction business, get in touch with us today.

Jamie Davies
Managing Director

As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients. 

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Disclaimer: Spark Finance Ltd (Registered office - 18 John Stow House, London, England, EC3A 7JB, Registered Number 10128297) helps UK firms access business finance. Spark is a credit broker, not a lender. Any quotes provided are for information purposes only and subject to status and separate lender terms and conditions. Applicants must be aged 18 and over.  Guarantees and Indemnities may be required.  Spark Finance may receive commission from lenders  which may vary depending on the lender, product, or other permissible factors. The nature of any commission model will be confirmed to you before you proceed.

Spark Finance Ltd is authorised and regulated by the Financial Conduct Authority in the UK (FRN 958123).