What Is Construction Invoice Factoring?

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If you want to start a business in the construction industry, then you need to learn all the special terminology related to this field. Financing is a major factor in construction, and construction factoring is one funding solution contractors and subcontractors can use to obtain cash advances on unpaid invoices. Also known as invoice factoring, this practice helps businesses maintain cash flow to pay their suppliers and employees before they have collected on unpaid invoices due to them from others.

In many cases, cash flow is one of the biggest obstacles for businesses, and that is particularly true for construction companies that often aren’t paid in full until work is completed but have to pay their own suppliers along the way. If they couldn’t pay for materials, it would create substantial construction delays. Construction factoring offers a quick, stress-free solution to temporary cash flow problems. Here’s what you need to know about the various types and benefits of construction invoice factoring.