Could Contract Factoring Be a Good Choice for Your Business?
Are you familiar with contract factoring? This is a common practice, particularly in construction when businesses are juggling multiple contracts and jobs simultaneously. Are you involved in the industry? Here is what you need to know:
Contract factoring is when you assess- or factor in all the invoices and bills for a particular project. It is easy for a construction company or contractor to face cash flow issues, as they wait for payments to invest in materials, labor, and costs associated with their project. Contract factoring provides a consistent cash flow, so you can better plan, prepare, and execute other jobs and projects during the interim. It provides a way of getting more work with less financial worry.
Conversely, spot factoring is when you get money for a specific job- without any commitment or responsibility to future projects. It may be considered a shorter-term solution than contract factoring, so it may not be the most prudent option for a business or contractor looking at long-term solutions and multiple construction projects.
For some, spot factoring is an effective way to get the money needed for the task at hand. For those looking to grow and develop their company, contract factoring may be the more pragmatic choice.
Benefits of Contract Factoring
Perhaps the biggest benefit of contract factoring is the amount of flexibility that it offers. Without the rigid regulations of a traditional lender, the terms of the contract may be more appealing to both parties. Additionally, this funding solution frees up cash and liquidity for other endeavors or unexpected expenses that could crop up. It is a win-win for many.
Want to learn more about contract factoring? Talk to the money professionals at Freedom Capital Solutions to discover alternative lending solutions for your business, company, or brand.