Construction Factoring ? Financing Sub-contractor Growth

The recently released 2010 Global Construction Survey by accounting firm KPMG highlighted the reality that the Australian construction sector performed well during the global financial crisis, in component due to the stimulus package from the Australian Government. Furthermore, this sector is looking forward for new projects to come pouring and an increased backlog for the new two to 4 years. The good news for the construction sector overall is a mixed benefit for sub-contractor businesses in Australia as recent information from credit reporting firm Dun & Bradstreet showed that trade payment terms increased year-on-year. 53 days on average for their bills or progress claims to be settled. Consequently, it is not unexpected that construction factoring ? which has been used in the construction business for years ? is on the rise. Contractors are going through cash flow problems because property managers are now focusing on new sustainable buildings together with the changes in building code standards. Commercial financing has been in chaos for the past year, looking for construction funding for commercial property makes this situation rather evident. Construction factoring can supply the much needed cash flow to pay suppliers and meet payroll. Why? Because factoring allows companies to obtain funds based on their present accounts receivables. Usually construction subcontractors have to wait as long as thirty to sixty days to get paid for their accounts. Advances against invoices is what enables construction factoring to provide adequate financing for the payment of bills in case cash flow is not enough. At present, the accessibility of commercial loans is rather tight. For a number of reasons, this has lead in even more of an apparent shortage of business financing for construction of new commercial property. Even before commercial finance choices became more restrictive during the past few years, construction financing was generally viewed as more ?risky? by most lenders. It is important to think about alternative providers for financing considering that commercial lending is presently ruled by Major Australian Banks, which may have elevated the risk since might have paid more interest on certain areas. Smaller alternative providers of finance will generally not have the same issue and can consider commercial financing involving both existing properties and new construction. In some places of Australia, the major banks have halted virtually all new business financing as well as construction financing. Thinking about the negative business credit atmosphere at present, it is crucial for small business owners to check out an invoice factoring company that will clarify to them the possibility of acquiring funding with the help of an alternative finance provider. Contractors and related small businesses alike can benefit from single invoice or spot factoring, stay in business and in most cases, grow when using smart financing choices. For more details about construction factoring call The Interface Financial Group (IFG) at 1.300 957 900.

Source: http://www.improve-your-credit.com/construction-factoring-financing-sub-contractor-growth/

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