Invoice Financing for Construction
You completed $85,000 in work last month. The GC approved it but pays net-60. Payroll is Friday. Materials for the next phase are waiting at the supplier. Invoice financing advances most of that receivable now so you can keep projects moving without waiting for payment cycles.
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Invoice Financing for Construction
Construction payment cycles are notoriously slow. GCs pay 30-60+ days after work completion. Invoice financing converts that waiting period to immediate working capital.
Construction Payment Reality
GCs typically pay subcontractors 30-60 days after work completion and approval. Commercial projects can run even longer. Work completed in April may not pay until June.
Client Creditworthiness
Many GCs and construction clients are creditworthy companies. Established GCs, government contracts, and commercial clients support excellent financing terms.
How It Works
Submit invoices for completed, approved work. Receive 80-90% advance within 24-72 hours. When the GC or client pays, you receive remaining balance minus fees.
Progress Billing
Progress billing invoices for completed portions of larger projects can be financed. Each approved draw becomes available working capital.
The Construction AR Challenge
Project payment cycles create accounts receivable that strain contractor cash flow.
60-Day Payment Cycles
GCs pay 30-60+ days after completion. Materials and labor are paid weekly or sooner. The structural gap strains cash flow.
Work Completed, Cash Waiting
You did the work. It was inspected and approved. But payment is weeks away while costs are due now.
Multiple Project AR
Several projects with outstanding invoices. Success creates AR that strains cash position.
Growth Constraints
Cash tied up in receivables limits ability to take new projects. AR timing constrains growth.
Retainage Timing
Retainage holds 5-10% until project completion. Additional capital locked in long-term AR.
Seasonal AR Buildup
Busy seasons create concentrated invoicing. Multiple large receivables outstanding simultaneously.
Construction Invoice Financing Process
Turn project invoices into cash within days.
Invoice Submission
Submit invoices for completed, approved work to GCs or clients.
Submit documents
Verification
We verify the work was completed and approved, and confirm client creditworthiness.
24-48 hours
Advance
Receive 80-90% of invoice value deposited to your account.
Same or next day
Settlement
When GC or client pays, you receive remaining balance minus financing fee.
When client pays
Get Paid Now for Completed Work
Invoice financing converts completed project receivables into immediate working capital. Stop waiting 60 days for GC payment. Access cash from work you have already completed and had approved.
Immediate Cash
Receive 80-90% of invoice value within 24-72 hours. Stop waiting 30-60+ days for project payment.
Client Credit Based
Financing is based on your clients' creditworthiness. Established GCs and commercial clients support excellent terms.
Project Continuity
Keep projects moving without waiting for payment. Fund next phase while awaiting current phase payment.
Not Debt
Invoice financing is a sale of receivables, not a loan. Accelerate payment on work already completed.
Progress Billing
Finance progress billing invoices as each phase completes. Do not wait until project end.
Scale With Projects
Finance more during busy periods. AR financing scales naturally with project volume.
Construction AR Financing Applications
Situations where invoice financing helps contractors.
GC Receivables
Sub-to-GC invoices waiting net-60. Finance to fund ongoing operations.
Typical funding: $20K-$150K advanced
Progress Billing
Monthly progress draws approved but not yet paid. Finance each draw.
Typical funding: $25K-$200K advanced
Commercial Projects
Commercial and institutional client invoices. Typically strong credit quality.
Typical funding: $30K-$250K advanced
Government AR
Government contract receivables. Slow payment but excellent credit.
Typical funding: $25K-$200K advanced
Multiple Project AR
Finance receivables across multiple active projects.
Typical funding: Based on AR volume
Seasonal Buildup
Finance concentrated AR during busy construction seasons.
Typical funding: Based on AR volume
Invoice Financing vs. Other Options
Understanding when construction AR financing makes sense.
| Feature | Invoice Financing | Working Capital | Line of Credit |
|---|---|---|---|
| Based On | Specific invoices | Overall business | Business + credit |
| Primary Factor | Client credit | Your financials | Your credit |
| Creates Debt | No | Yes | Yes when drawn |
| Scales With AR | Yes | Fixed amount | Fixed limit |
| Speed | 24-72 hours | Days to weeks | Days to establish |
| Typical Cost | 2-4% of invoice | Interest rate | Interest on draws |
| Best For | AR acceleration | General capital | Variable needs |
Construction AR Financing Requirements
Invoice financing focuses on receivables quality and client creditworthiness.
Completed Work
Invoices must be for completed, approved work. Work inspected and accepted.
Completed/approved
Client Quality
Clients should be creditworthy entities. Established GCs, government, commercial clients.
Creditworthy clients
Invoice Documentation
Clear invoices showing work completed, amounts, and client information.
Clean invoicing
No Disputes
Invoices should not be subject to disputes, liens, or unresolved issues.
Clean AR
Operating Business
Active construction business with ongoing projects.
Active operations
Standard Payment Terms
Invoices with standard payment terms (net-30, net-60, etc.).
Standard terms
Contractors with quality GC relationships and commercial clients are ideal candidates for AR financing.
Real Results
Atlas Electrical Contractors
Commercial Electrical, Texas
The Challenge
Atlas had $220,000 in outstanding invoices from 3 commercial GCs, all on net-60 terms. They needed cash for materials and payroll on ongoing projects. AR was constraining growth.
The Solution
We established invoice financing for their commercial receivables, advancing 85% of invoices ($187,000 initially) within 48 hours. Average financing cost: 2.5% of invoice value.
The Result
Atlas maintains smooth cash flow regardless of GC payment timing. They now routinely finance $150,000-$300,000 monthly in project AR during busy periods.
“GCs pay when they pay. We cannot wait 60 days when crews need weekly checks and materials are needed now. Invoice financing means payment timing does not limit our growth.”
Construction AR Data
Industry statistics on contractor receivables.
Construction AR Financing Advantages
Strategic benefits of converting project invoices to cash.
Project Continuity
Fund next phase without waiting for current phase payment.
Payroll Security
Cover crew payroll regardless of GC payment timing.
No Balance Sheet Debt
Invoice financing is a sale of receivables, not a loan.
Growth Enablement
Take on more projects knowing you can convert AR to cash.
Materials Funding
Purchase materials for next phase without cash constraints.
Seasonal Scaling
Finance more during busy seasons, less during slow periods.