Construction Invoice Factoring

Giving you the capital needed to grow your business.

Built to Scale For Your Business.

Cash flow can be a significant concern in construction because it’s not uncommon that the bulk of invoices are paid when the job is complete. Small independent contractors may not qualify for a business loan or line of credit from the bank. Construction invoice factoring for small businesses is one option that contractors and subcontractors can use to get cash fast on unpaid invoices and receivables. 

What is Construction Invoice Factoring?

Many companies collect cash daily, so cash flow is rarely an issue. Not so with construction companies. They typically receive a small cash advance at the start of the job, with the remaining balance billed after the job is complete. In the meantime, contractors and subcontractors are out the cost of construction materials, labor, and other expenses.

This can make it challenging to manage cash flow volatility, especially if suppliers have terms longer than 30-days. That’s where construction invoice factoring can help. If you need capital to operate your business, invoice factoring with FundThrough can advance up to 80% of net commercial invoices in as little as one day.

Funding for Any Type of Construction Business

It’s not uncommon that both construction companies and independent contractors face cash flow problems. Factoring construction invoices distributes money to your company as payments for account receivables/invoices, called an advance. 

Invoice factoring is a practical solution to cash flow problems for businesses in construction or any type of business:

  • Utilities
  • Electrical
  • Plumbing
  • HVAC
  • Glazier
  • Concrete
  • Demolition
  • Boilermaker
  • Excavation
  • Demolition
  • Roofing
  • Masonry
  • Landscaping 
  • Paving
  • Concrete
  • Iron Worker
  • Painter
  • Pile Driver
  • Site Clean-up
  • Staffing agencies
  • Welder
  • Engineer
  • and more.

How Does Construction Factoring Work?

With construction factoring, you get unlimited working capital based on the size of your outstanding invoices. It’s a simple process. Transactions are automated, and payment is prompt.

✔  As a construction company, you submit your unpaid invoices to FundThrough for factoring. 

✔  FundThrough purchases your invoices and advances up to 80% of the expected net collectible value. Invoices must be at least 90-days old.

✔  You get unlimited working capital based on the size of your outstanding customer invoices.

✔  Get paid the full invoice amount, typically within 24 hours, minus a fee.

✔  Your customer pays the invoice to FundThrough, based on the original terms of the invoice. 

✔  You can get back to work.


The amount advanced varies based on the claim amount and the size of the

construction company.

Types of Construction Factoring

Contract and spot factoring are the two main types of construction factoring. Essentially, the main difference is the amount of the invoices. Generally, contract factoring is used for long-term contracts. Spot factoring is typically used to collect on single invoices. 

Contract Factoring

Contract factoring, or selective factoring, requires construction companies or independent contractors to select which invoices (usually a percentage of outstanding receivables) to factor. The factoring company might set a minimum dollar amount. 

Contract factoring can be less expensive overall. That may be because of the larger volume of invoices. Some factoring companies offer a discount or a higher advance rate with a greater volume of invoices. However, subcontractors may not meet the minimum volume required by a factoring company. In that case, spot factoring may be best. 

Spot Factoring

Construction spot factoring is the financing of single invoices or several specific transactions. Spot factoring gives contractors and subcontractors the flexibility to choose which invoices to factor. There is usually no contract required. 

Spot factoring is an excellent choice for construction companies and independent contractors that are growing but can still maintain a certain amount of control over cash flow and working capital. Spot factoring also comes in handy when a contractor accepts a larger project or wins a large contract but doesn’t necessarily have the cash reserves to cover slow payments.

What is Construction Invoice Factoring Used for?

One of the construction industry’s challenges is controlling cash flow because of delays for invoice payment. Typically, contractors receive a portion of the total cost of a job upfront. The balance is paid when the project is complete, which can be months later.

But operating expenses, materials, and payroll must be paid on time. Most construction companies don’t have extra capital to wait for the bulk of invoices to be paid, especially if growing quickly or the winner of a large contract.

Factoring with FundThrough cuts the waiting time to receive payment on your invoices by 97%, accelerating cash flow and giving you the chunk of capital to grow your business. You get almost immediate access to funds—often in as little as 24 hours.

Pros and Cons of Invoice Factoring for Subcontractors and Construction Companies

As with most anything, factoring construction invoices has pros and cons. However, compared to other financing types, the advantages of factoring with FundThrough far outweigh the disadvantages.



  • Personal credit score, business credit score, monthly sales, and business history does not matter. Factoring is not a loan that you pay back with interest. It can also be easier to qualify for factoring than for a loan.
  • If you’re’ working with less-than-credible customers, you may not be approved for invoice factoring. Invoices must be at least 90-days old.
  • It won’t cost you anything upfront to create an account. The application process takes less than 5 minutes. Invoice factoring agreements are less rigorous than bank application processes.
  • Factoring companies charge a small funding fee.
  • Factoring helps maintain steady cash flow so you can grow your business. Plus, you retain the equity in your business
  • Only solves one problem: cash flow shortfalls due to slow-paying clients.
  • You might receive faster approval times and cash in less than 24-hours.
  • Not all invoices qualify.
  • You get transparent access to your pricing and funding options before you choose which invoices to fund.
  • You get flexible repayment terms with the option for early repayment, lump sum repayment, and custom repayment to help you save on funding fees.
  • You get a top-rated and trusted funding partner who has expertise in your industry.
  • Your company is protected from bad debt

In an industry where it takes an average of 83 days to get paid, contractors are looking for a quick and easy option. Instead of waiting weeks for payment, 5F Contractors partnered with FundThrough to manage and boost its cash flow in as little as 24 hours.

5fort contractors logo

Is Construction Invoice Factoring a Loan?

No. Construction invoice factoring is not a loan. However, if you don’t have the quick cash on hand to meet your expenses, the two most common business funding options to get the financial support you need is construction factoring and small business loans. 


If you’re a small construction company or subcontractor, it may be challenging to qualify for a small business loan. On the other hand, your credit or credit history doesn’t matter with factoring. And, while you are responsible for paying back a loan with interest, there’s nothing to pay back with construction factoring. 

Why You Should Work With a Construction Factoring Company

Many factoring companies specialize in only a couple of industries, which limits their expertise to only those types of businesses. Since you’re in construction, it’s best to choose a factoring company specializing in construction, like FundThrough. 

That way, you’re working with a company that understands the challenges you face every day and the lengthy payment terms that can trigger cash flow challenges. Factoring companies that work with construction companies and subcontractors also understand the laws, contracts, accounts receivables processes, and how to manage suppliers’ invoices. 

FundThrough also understands the intricacies of working with your specific customers, which can go a long way to maintaining your client relationships. 

FundThrough has the knowledge and experience of working with the construction industry. 

Construction Invoice Factoring FAQs

Your questions answered.

With invoice factoring, you sell selected invoices to a factoring company, like FundThrough, who in turn collects the total amount of your invoices, minus a small fee, on your behalf. 

Like invoice factoring, you can pick the invoices you choose to finance with invoice financing. Invoice financing companies typically charge a monthly fee, but unlike factoring, you usually deal directly with your customers.

Some banks do offer to factor, although it is not all that common. However, the factoring industry has changed over the past several years, driven by lower rates and reduced risk, attracting banks to jump on board. Still, banks rarely have expertise in all industries. Instead, specializing in only a few.

Tax experts disagree about whether or not factoring fees are tax-deductible. FundThrough advises that you check with your financial advisor or accountant before you file your taxes. That’s because the answer may depend on your specific tax situation and jurisdiction.

Simple. Intuitive. Construction Invoice Factoring.

Built For Your Business.