Factoring is a popular way for seasonal businesses to get a couple of important cash flow injections when they need them most: at the beginning of the busy season and near the end of it. These well-timed revenue boosts are what help them plan for and survive a sizable off season.
Making the Invisible Visible
Construction businesses, particularly those that focus on commercial and residential projects, use factoring quite often. In fact, the Advance Funds Network sees a high number of repeat customers in the factoring department. Whether we facilitate the purchase of the accounts, or take on the accounts ourselves; the client can count on getting the business line of credit they need right when they need it.
At AFN, we recently helped a construction company secure $50,000. The company received two installments of $25,000 for additional working capital. The company, based in Anaheim, CA, used the funds to cover costs in their busy season.
Construction companies that have a lot of resources can get tied up in contingencies. They have to bid for jobs during prime construction times. If they get the job, their payment for that job depends on the efficiency and quality of the work they produce. This focus on eventualities does lead to a paycheck, but it doesn’t lead to a consistent cash flow month in and month out.
A Winning Combination
Using the winning combination of (multi-contract) factoring and an unsecured business line of credit; construction companies are able to meet the demands of overhead and operating costs no matter what the month brings.
For example, a business can apply for funding, and if they are approved, they can choose how the funds are disseminated.
There are two choices:
- The lump sum
- The staggered approach
The lump sum is exactly what it sounds like. A business can get all the money for their factoring purchase upfront, in one lump sum. Staggering it is often a desired approach; especially if you are unsure about your revenue stream.
This means you get one amount early on (usually larger) and more funding a couple of months later. This helps keep an unstable cash flow in balance all throughout the season. A multi-funding contract through AFN allows you to break up a funding injection of up to $1,000,000 into multiple tranches. These “pulls” can be applied to your business line of credit, giving you access to that operating capital exactly when you need it most.
This is one application of a very versatile cash flow solution. There are many styles to choose from. Getting the funding is quick and easy by design. We understand that sometimes you need money on-hand without having to jump through hoops to get it. Those hoops have been removed or reduced. You can get what you need without collateral or the traditional hassle associated with banks and credit unions.
Contact us. We can start goal-setting with unsecured funds.
