Maintain Steady Cash Flow for Project Success
Construction Factoring
Construction factoring is a form of accounts receivable financing that converts unpaid progress invoices or milestone bills into immediate operating capital. At Commercial Finance Partners, we simplify this transaction by underwriting receivables, verifying progress claims, and advancing funds so construction companies can keep projects on schedule and budget.
Customer Testimonials
Construction Factoring Services
In the construction sector, long payment cycles and retained percentages can create significant cash flow challenges. Construction Factoring addresses these hurdles by financing invoices tied to completed work or specific project milestones. This solution helps cover daily expenses like labor, materials, and subcontractors, ensuring deadlines are met without delaying new bids or expansions.
Commercial Finance Partners takes a proactive approach to Construction Factoring. We examine project documentation, confirm payment milestones, and coordinate directly with relevant parties. By expediting payments on approved invoices, we allow you to maintain momentum, meet payroll, and capitalize on new opportunities within the industry’s demanding timelines.
Immediate Working Capital
Get same-day funding on verified invoices, reducing reliance on traditional bank loans.
Improved Project Efficiency:
Keep teams and supplies available, minimizing downtime and meeting client expectations.
Reduced Credit Risk
Transfer collection responsibilities to us, limiting the impact of delayed or disputed payments.
Scalable Financing
Increase your factoring volume as you take on more or larger projects.
Construction Factoring Business Case Studies
How Construction Factoring Accelerated a Commercial Build
Freed funds for vital materials:
- Maintained project timelines
- Hired additional workers
- Improved vendor relationships
- Avoided expensive loan terms
- Built client satisfaction
How Construction Factoring Supported a Mid-Project Expansion
Secured cash for unforeseen costs:
- Eliminated finance bottlenecks
- Covered added labor demands
- Reduced stress for stakeholders
- Negotiated supplier discounts
- Completed expansion faster
How Construction Factoring Enhanced Cash Flow for Contractor
Increased bidding power and capacity:
- Filled payment gaps quickly
- Balanced multiple projects
- Attracted new clientele
- Avoided delayed wages
- Boosted company reputation
The importance of
Construction Factoring
Accounts Receivable Finance is crucial for businesses that rely on contractual or milestone-based billing, such as construction. By converting outstanding invoices into immediate capital, companies can maintain smoother operations, invest in resources, and reduce the stress that comes with elongated payment cycles. This proactive approach to cash flow preserves relationships with suppliers, employees, and clients alike.
Why Choose Commercial Finance Partners:
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Provided rapid invoice advances tailored for construction projects and timelines.✦
Simplified milestone verifications and progress claims to speed up funding.
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Reduced administrative burdens, letting you focus on project management.✦
Ensured flexible terms that adapt to changing construction scopes.✦
We support your expansion goals with consistent, reliable capital access.Commercial Finance Partners has extensive experience structuring customized financing for project-based industries. We work closely with contractors to assess invoice validity, risk exposure, and capital needs, ensuring that each factoring arrangement supports both short-term requirements and long-term ambitions. Our transparent and consultative method positions our clients to handle growth sustainably while maintaining a competitive edge.
How Construction Factoring Works
Construction factoring is accounts receivable financing aimed at subcontractors working on commercial or government projects. It provides same-day funding on verified invoices after you submit approved progress billings or payment applications.
The process follows four steps: you sell the invoice to a factoring company, the factoring company advances you a percentage of the invoice amount, it collects repayment from your customer, and it sends you the remainder of the invoice amount, minus fees. Across the factoring industry, advances typically run 70% to 90% of unpaid invoices, and fees usually run 1% to 5% per 30 days. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet.
Construction billings can also carry retainage. On federal construction contracts, a percentage of a progress payment may be retained when satisfactory progress has not been achieved, retainage may not exceed 10 percent of the approved estimated amount, and retained amounts are paid promptly once all contract requirements are complete.
Sources: NerdWallet; Bankrate; U.S. Chamber of Commerce; FAR 32.103.
Who Uses Construction Factoring?
Construction factoring is especially useful for contractors that need capital for materials and labor. Pricing depends on the invoice amount, your sales volume and your customer’s creditworthiness, and factoring is generally easier to qualify for than traditional loan options.
Construction Factoring FAQs
What is construction factoring?
Construction factoring is a type of accounts receivable financing aimed at subcontractors working on commercial or government projects. It provides same-day funding on verified invoices after you submit approved progress billings or payment applications. Commercial Finance Partners simplifies the transaction by underwriting receivables, verifying progress claims and advancing funds so construction companies can keep projects on schedule and budget.
How does construction factoring work?
You sell an approved progress invoice to a factoring company, which advances you a percentage of the invoice amount, typically 70% to 90%. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet. The factoring company then collects repayment from your customer and sends you the remainder of the invoice amount, minus fees.
What is retainage on a construction contract?
Retainage is a percentage of a progress payment that is held back under the contract. On federal construction contracts, it may be retained when satisfactory progress has not been achieved, it may not exceed 10 percent of the approved estimated amount, and retained amounts are paid promptly once all contract requirements are complete.
How much does construction factoring cost?
Factoring fees usually run 1% to 5% of the invoice value per 30 days. Your fee depends on the invoice amount, your sales volume, your customer’s ability to repay and whether the agreement is recourse or non-recourse. Extra fees may include service fees, monthly minimum fees and origination fees.
Related: Invoice factoring · Manufacturing invoice factoring
The financing solutions provided by Commercial Finance Partners were exactly what I needed. Their team was professional and helped me every step of the way
Matthew Rodriguez Business Owner