This program is designed for subcontractors in the construction industry who perform work for general contractors or businesses with good credit. It can also be used by contractors whose business customer or client has good credit. This program allows subcontractors and contractors to acquire working capital from invoices they have submitted for completed work.  Working capital acquired in this way can be used to pay employees,  buy materials for another project, take advantage of cash or quantity discounts for materials, make tax withholding payments, or buy equipment.

Contractors should consider using this program if slow payment from your general contractors or business customer is preventing your company from taking advantage of new business, or is just making it difficult for you to stay in business. With this program you can concentrate on growing your business rather than worrying about when you are going to get paid for the work you have already done. Once your account is set up, you can get an advance of up to 70% for completed work in as little as 24 to 48 hours. Compare this with weeks you would normally wait to get paid.

The types of subcontractors that can take advantage of this program include but are not limited to the following.

• carpenters
• paving
• flooring and carpet
• plumbing
• roofing
• underground utilities
• electrical
• tile
• inspectors
• steel fabricators
• landscapers
• excavators
• ceiling and drywall
• engineers
• architects  
• security
• fire sprinkler
• supply houses
• appraisers  

Advantages of this program:

• does not create new debt  
• no long term contracts to sign
• improves availability of working capital
• allows subcontractor to take additional jobs because of additional capital
• does not depend on subcontractor’s credit rating  
• fast and easy
• limited only by ability of the subcontractor to generate new invoices for work done
• allows credit terms to be offered to clients or customers
• improve your credit rating by paying your bills sooner
• may allow access to cash or volume discounts for materials
• does not give up equity interest in the subcontractor’s or contractor's company
• no personal guarantees required 
• assistance with collections & credit reports on prospective customers and continuous monitoring of the credit status of existing customers
• invoices can be presented for advance part way through the payment cycle to reduce the fees (e.g. submit an invoice that normally would be paid in 90 days at day 50 in order to cut the fees in half)

Qualifications and Information

Type of Financing .....Invoices are being purchased at a discount. This is not a loan. You are not creating new debt with this program.

Minimum Invoice Volume .....None but there is a $250 minimum discount per transaction. A preferred minimum is about $10,000 per transaction.

Maximum Invoice Volume .....None (based on the credit worthiness of the customer or client)

Credit Worthiness .....Funding decision is based on credit worthiness of the subcontractor’s or contractor's customer

Funding Time .....Initial transaction takes 5 to 7 days because of the due diligence checks. After that funding can be done in 24 to 48 hours after the invoices are presented. Deposit of funds can be done via a wire transfer.

Advance Rate.....Up to 70% of the invoiced amount less the “retainage” amount

Fees on the Face Value of the Invoices.....4% for the first 30 days. 1% for each 10 days thereafter

One time due diligence fee.... $750 (used for account setup processing and UCC and Dun and Bradstreet reports) (This is requested after the funding company has determined that they are interested in pursuing a financing relationship with the client, but it does not guarantee that they will advance on all invoices).

Type of recourse..... This is a “non-recourse” program meaning if the general contractor does not pay the invoice due to credit problems, the subcontractor is NOT responsible to repay the advance

Lien Position.....The funding company must be able to obtain a first position lien on all assets. A blanket UCC-1 is filed.

Excluded contractors .....Home remodeling contractors cannot be funded.  

Here is an example:

A plumbing subcontractor has completed work on a project where the invoiced amount is $80,000. The contractor specifies that 10% will be held back as “retainage” to allow for correction of defects in the work performed. The contractor also says that payment terms are net-60. The electrical subcontractor cannot wait 60 days to receive payment because cash is needed to pay the subcontractor’s employees. The plumbing subcontractor decides to seek accounts receivable financing like the program described above. The funding company reviews the application from the subcontractor and credit worthiness of the general contractor, and decides to advance 60% of the invoiced amount less the amount held for retainage. The remaining amount of the invoice (less the discount) will be disbursed to the plumbing contractor when the funding company receives payment from the general contractor. 

Would these benefits have an impact on your business?

Imagine the possibilities your business can have when you have cash on demand!!!!

 

Contact us today for more info!

info@accountsreceivablesfactoring.net

 

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            American Cash Flow Association.

 

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