Construction invoice factoring
Quick answer
Invoice factoring turns unpaid construction invoices into cash within a day or two. You sell an invoice to a factor, get 80–90% up front, and receive the rest minus a 1–3% fee when your client pays.
Because approval is based on your customer's credit rather than yours, it works even with thin personal credit — making it the go-to fix for slow-paying general contractors.
Factoring is the most direct answer to the oldest problem in construction: you did the work, but the check is 60 days out.
Instead of borrowing against the future, you're getting paid early for work you've already done. That's a different and often better deal than a loan.
Key takeaways
- → Get 80–90% of an invoice within 24–48 hours; the rest follows when the client pays.
- → Approved on your customer's credit, not yours — ideal for thin credit and subs.
- → Costs a 1–3% factor fee per invoice.
- → Use a factor that understands construction progress billing and retainage.
How factoring works step by step
You complete the work and invoice your client as usual. You sell that invoice to the factor, which advances 80 to 90% within a day or two.
When your client pays the invoice, the factor releases the remaining balance minus its fee. You got your cash weeks earlier, and the factor handled the wait.
Why it fits subcontractors
Subs are the classic factoring users because they're stuck waiting on general contractors. Approval rides on the GC's creditworthiness, so a sub with thin credit can still factor easily.
Just pick a factor that knows construction — progress billing and retainage trip up generalist firms, as covered in the working capital overview.
What it costs and when to use it
A 1 to 3% fee per invoice looks steep next to a line of credit, but the comparison that matters is against the cost of waiting — a stalled job or missed payroll.
Use factoring for slow-pay situations and big invoices; use a line of credit for cheaper recurring gaps.
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eBoost Partners includes invoice factoring among its construction business financing options.