Invoice Factoring for Construction and Subcontractors

Fewer factors take construction, and those that do price it higher. The reason is structural: construction receivables are conditional in a way most receivables are not.

Why it is harder to factor

• Progress billing. Invoices represent partial completion and can be disputed on quality or measurement.
• Retainage. A share of every invoice is held back until project completion, sometimes for months after your work ends.
• Lien rights and waivers. Signing a lien waiver removes your strongest security, and factors care about the sequencing.
• Pay-when-paid clauses. Your invoice may not be legally due until the GC is paid by the owner.
• Backcharges. Deductions applied after invoicing.

What to ask a construction factor

1. Do you advance against retainage, and at what rate?
2. How do you handle a pay-when-paid clause in the underlying contract?
3. What happens to funding when a backcharge is applied?
4. Do you require lien waivers, and at what point in the cycle?
5. Do you fund progress billings before final completion?

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Who it fits

Subcontractors with strong GC 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.