Construction Invoice Factoring Boosts Cash Flow For Builders in Tough Economy

The auto industry is getting all the attention during this recession but the construction industry is quietly feeling the pain also. You hear a lot about “housing starts,” “sales of new homes” and “sales of existing homes” when analysts are discussing economic indicators but rarely do you hear a company mentioned by name. That’s because there are so many more players in the industry and no single entity receives as much attention or has as much impact as a company like General Motors does for auto industry. But that doesn’t mean that there are not just as many challenges for builders and contractors both large and small.One of the major challenges facing the construction industry is financing. Credit is tight and there are many builders eager to move forward with projects that can’t get the capital do get a project started or an existing project completed. That is where construction invoice factoring is a necessary and logical alternative.During the course of any construction project a builder, contractor or sub-contractor is likely holding a substantial amount in receivables. They have performed a task or even finished a project and are waiting to get paid. These days, every company is waiting as long as possible to pay their bills so the builder is waiting up to 90 days or longer to receive payment. Meanwhile, the builder has expenses that must be paid such as salaries, maintenance, rent, etc. Getting financing from a bank to keep the business solvent is difficult, to say the least.However, the fact is that the outstanding invoices that a builder is holding are an asset and have a value. Construction invoice factoring allows the builder to leverage this asset to free up much needed cash to pay expenses. After all, it’s all about cash flow and if cash isn’t flowing in then there is no cash to flow out.Invoice factoring is the practice of “selling” invoices to a company or individual called a factor. The factoring agent provides the builder with a percentage of the face value of the invoices, typically 70-90% depending on the payment history and credit worthiness of the invoiced companies. When the bills are finally paid the factor provides the balance of the amount due less a small percentage for the service. This “fee” or “rate” ranges from 1-5%.The key benefit of construction invoice factoring is that the builder or contractor ends up with cash in hand quickly, often in 24-48 hours. And the cash they are receiving is their money, not funds that must be repaid to a bank over time. This allows a builder to stay current with their payables and invest in items, like equipment, that will make their business more efficient and more profitable.Construction invoice factoring has, in the past, been viewed as an expensive proposition and the action of last resort. But more builders, along with members of many other industries, are reconsidering the value of receivables factoring. In a tight credit market, invoice factoring is keeping many companies in business. Even some banks have started to appreciate the benefits of receivables factoring and are starting divisions to offer this service.Sometimes it takes adversity to highlight a formerly underappreciated service. And in a recession where much of the focus is on activity in the construction sector, construction invoice factoring has become a financial lifeline for many builders and contractors, both small and large.

How to Effectively Manage Construction Costs

Cost management is an effective way of making sure that a business controls its expenditure when it comes to doing everyday business. In the case of construction, quantity surveyors come in handy in making sure that businesses are able to plan and execute their business strategies in a cost-effective manner. To cut on the huge cost of construction, there are several steps businesses can take to make this possible.Identify the price of commoditiesThe first step to ensuring lower cost of construction is identifying the global price of commodities that are going to be used in the entire process. It is the work of quantity surveyors to ensure that they have provided businesses with an up-to-date list of all commodities to be used and the retail price recommended. Most construction projects need items like metal, cement and special ones like ceramics and marble. Identifying the cost prior to the kick off of the project makes it possible to adjust whenever there is need to do so.Compare the price to previous similar projectsAnother good tip is to compare the cost of the project to similar projects that have been done elsewhere. Businesses ought to hold discussions with quantity surveyors so as to carry out cost analysis of other projects and compare them with one that they are about to start. This is the only way to keep track of whether the cost of labor and material has gone up or down over the years. The most up-to-date information should be relied on by quantity surveyors advising businesses in order to avoid situations whereby the cost of doing the project goes beyond the initial budget that was intended for the project.Consider the use of technologyToday’s construction cost estimation needs to take advantage of available technology when it comes to increasing percentage of accuracy. The best way to reduce the cost and avoid unnecessary wastage of funds is for quantity surveyors to ensure that they apply the latest technology when it comes to doing their work. The best thing is that it keeps everything in place and all parameters can be looked at to ensure that the cost of the project can be estimated at once. Project management software in the market today are easy to use and the output can easily be understood for purposes of decision making by businesses that are involved in the entire process.

Construction Leads Are Being Found Using Technology

Construction leads and project leads for the construction industry are getting harder to come by for some. This isn’t because people have all of a sudden decided to stop building or making improvements to their home or business. No…it’s because human’s have changed the way that they accept information.Construction leads are now being produced by a different person then what they were even just 10 years ago. The people looking to have projects done today are of the tech generation. This generation has grown up in a parrell world. They have straddled a life accepting both old ways of advertising into their life and growing with the internet and modern technologies.Unfortunately the construction industry as a whole has some catch up work to do to appeal to where their clients are looking for service providers. The industry as a whole needs to embrace the modern ways of marketing and adverting into their construction business or the quality of leads will continue to deteriorate.In order to stay top of mind in the old days of advertising for construction leads you would have been well served to advertise in the phone book. This was a common place for people to look for construction experts when they needed them.There are a few problems with the concept in general of the phone book. Generally in business you want to stand out from your competition…you want to be considered different then the guy next door..right?Why then would you lump your self right next to the biggest competitors in your market? Seams to go against every thing you try to do day in and day out.The other problem with phone book advertising is it is very costly. This at one time was off set because you were able to attract enough project leads buy using this method. The leads were of good quality and you could make a good bit of money from each one.Today how ever the leads that come from the phone books are not that great of quality meaning you need to sell many more of them just to make up the money spent on the advertising it’s self.A modern contractor looking for construction leads needs to incorporate a modern way of adverting. this should include email marketing and using other technologies to attract the people that have the projects they are looking for.There is an old saying, “Fish where the fish are.” So are you?