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Last edited 01 Mar 2021
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 issue 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 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 paid, the balance (less any fees) is sent on to the seller.
The standard process is 'factoring' - where the customer is made aware that the finance company is chasing for payment. In confidential invoice discounting, the customer is unaware that the finance company is chasing for payment.
 Related articles on Designing Buildings Wiki
- Buyer-funded development.
- Cash flow.
- Construction loan.
- Construction project funding.
- Cost plans.
- Discounted cash flow.
- Equity and loan capital.
- Equity in property.
- Funding options.
- Funding prospectus.
- Mezzanine finance.
- Project-based funding.
- Real Estate Investment Trusts.
- Reverse premium.
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