Funding options for building developments

2019-11-25T17:19:52Z

Richard Leader:

It is rare in the private sector for the client to provide all the funding for its capital projects and even in the public sector the government has sought to use external funding by means of the private finance initiative (PFI).

A preliminary assessment of funding options should be carried out when considering whether to proceed with a project.

This assessment might consider:

* Budget.
* Draw-down facilities.
* Approvals and consents.
* Tax and grants (such as UK trusts and foundations and European trusts).
* Loan size and term.
* Land and site value.
* Building costs.
* End valuation.
* Stage payments.
* Planning risk.
* Profit on cost.
* Collateral or guarantor.

Sources of funding might include:

* Construction and development loans from a specialist property funder or senior debt lender (such as a commercial or high street bank).
* [[Mezzanine_finance|Mezzanine finance.]]
* Bridging finance.
* Project finance with special project vehicle (equity) and syndicated non-recourse loans and /or limited recourse finance.
* [[Invoice_finance|Invoice finance]].

For the public sector, funding options might also include:

* Private developer scheme (PDS).
* Leasehold.
* Crown build.

If assistance or advice is required from the consultant team or independent client advisers in the preparation of a funding prospectus, application for grants etc, then this should be made clear in appointing documents as it may not be included in their standard scope of services.

NB: The damning [http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/1146/114602.htm 2011 House of Commons Treasury Select Committee report on PFI] has found '...that PFI projects are significantly more expensive to fund over the life of a project' and that there is no '...clear evidence of savings and benefits in other areas of PFI projects which are sufficient to offset this significantly higher cost of finance'.

On the 5th December 2012, the government published details of a new approach, stating that it ‘…remains committed to private sector involvement in delivering infrastructure and services, but has recognised the need to address the widespread concerns…’. The new version of PFI is referred to as PF2, and the key changes are set out in the article: PF2.

In the October 2018 Budget, the then Chancellor Philip Hammond announced that he would abolish the use of private finance initiatives (PFI) for future building projects.

= Related articles on Designing Buildings Wiki =

* Bridging loan.
* Business process outsourcing (BPO).
* Buyer-funded development.
* Collateral.
* Construction loan.
* Construction project funding.
* Cost plans.
* Direct cost.
* Equity and loan capital.
* Funding prospectus.
* Gross development value.
* Leaseback.
* Mezzanine finance.
* PF2.
* Private Finance Initiative.
* Project-based funding.
* Property development finance.
* Property valuation.
* Remortgage.

= External links =

* [http://webarchive.nationalarchives.gov.uk/20100503135839/http://www.ogc.gov.uk/documents/CP0066AEGuide6.pdf Achieving Excellence Guide 6 - Procurement and Contract Strategies].
* [http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/1146/114602.htm 2011 House of Commons Treasury Select Committee report on PFI].

[[Category:Taxation]] [[Category:Cost_/_business_planning]]

Invoice finance

2019-11-25T16:45:09Z

Richard Leader: Created page with "== What Is Invoice Finance: == Invoice finance is a means of receiving early payment on invoices to improve cash-flow. One of the key issues facing contractors and sub-contract..."

== What Is Invoice Finance: ==

Invoice finance is a means of receiving early payment on invoices to improve cash-flow.

One of the key issues facing contractors and sub-contractors in the construction industry has always been that of late payment. Invoice Finance is a product (or group of products) aimed at improving cash-flow for businesses who issues 30/60/90 day invoices to other businesses.

== How It Works: ==

* Once a facility is in place, the standard invoice is sent to the customer as usual.
* A copy of the invoice is then sent to the finance provider who will pay a pre-arranged percentage of the invoice amount within 24 hours. The amount paid is usually between 80% and 100% of the invoice total.
* The invoice finance company will chase the customer for payment and when the balance is paid in full and any outstanding amount (less any fees) is sent on to you.

The standard process is [https://www.touchfinancial.co.uk/finance-options/invoice-finance/invoice-factoring/ Factoring] - where the customer is made aware that the finance company is chasign for payment. In [https://www.touchfinancial.co.uk/finance-options/invoice-finance/invoice-discounting/ Confidential Invoice Discounting], the customer is unaware that the finance company is chasing for payment.

[[Category:Definitions]]

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Funding options for building developments

Invoice finance