Invoice Factoring for Construction and Subcontractors
Progress billing, retainage and lien exposure make construction the hardest common industry to factor.
Fewer factors take construction, and those that do price it higher. The reason is structural rather than prejudicial: construction receivables are conditional in ways most receivables are not, and every one of those conditions is a way the invoice might not get paid in full.
Why construction is harder to factor
- Progress billing. Invoices represent partial completion and can be disputed on measurement or quality rather than simply paid.
- Retainage. A share of every invoice — commonly 5–10% — is held back until project completion, sometimes months after your work ends.
- Lien rights and waivers. Signing a lien waiver removes your strongest security, and factors care a great deal about the sequencing.
- Pay-when-paid clauses. Your invoice may not be contractually due until the general contractor is paid by the owner.
- Backcharges. Deductions applied after invoicing, for damage, delay or remedial work.
Each of those is a reason a factor might advance less, price higher, or decline the receivable entirely — and it is why a construction quote looks worse than a staffing quote from the same company.
Retainage is the specific problem
Retainage is money you have earned and cannot collect, sometimes for a year. Most factors will not advance against it at all, which means a 10% retainage on your contracts effectively caps your factorable revenue at 90% before any advance rate is applied.
A few providers will advance against retainage at a reduced rate. If retainage is a material part of your cash position, that single capability may matter more than the headline rate — ask about it explicitly rather than assuming.
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What to ask a construction factor
- Do you advance against retainage, and at what rate?
- How do you handle a pay-when-paid clause in the underlying contract?
- What happens to funding when a backcharge is applied after we have been advanced?
- Do you require lien waivers, and at what point in the cycle?
- Do you fund progress billings before final completion, or only completed work?
- Have you funded my trade specifically — and can you describe how the billing works in it?
The last question matters more than it sounds. A factor who has funded electrical subcontractors understands your billing cycle; one who has not will learn on your account.
How to read the blanks on this site
Every populated figure on this site was read from the company's own published pages, with the source and date attached. Where a cell says Not published, the company does not put that term in writing on its site — and in a market where the contract matters more than the headline rate, what a factor declines to publish is often the more useful signal. We never fill a gap with an estimate.
Who construction factoring fits
Subcontractors with strong general contractor relationships and clean, well-documented billing. If your billing is frequently disputed or your paperwork is loose, factoring will amplify the problem rather than solve it — disputed invoices are exactly what factors charge back, and a chargeback lands after you have already spent the money.
It fits badly if most of your revenue is tied up in retainage, if your contracts contain restrictive assignment clauses, or if your GC relationships are adversarial enough that a third party contacting them creates friction you cannot afford.
Alternatives
Material supplier terms, equipment finance for the specific asset, or a line of credit if your balance sheet supports it. Mobilisation funding from the GC is worth asking about directly and costs nothing to request.