Does your business need cash?
Seems like a ridiculous question – of course you do!
Whether it’s to pay your suppliers, to grow your business, or simply to save it for a rainy day, cash is the lifeblood of every business.
This is especially true in the construction industry, where it can take months to get paid, the margins are thin, and you often need to put down money upfront to get projects started.
So how do you get more cash into your bank account? Check out three financing options below – FYI, we saved the best for last.
Book a Meeting to learn more about Early Pay Program.
One idea is debt – a good old-fashioned bank loan, or even a credit card.
But debt comes with significant problems: Banks offer low interest rates, but it can be very difficult to get one – as the adage goes, banks only lend money to those who don’t need it. Banks may also require large amounts of collateral or personal guarantees to approve any sort of loan, which is a risk you may not want to take. Credit cards have very high interest rates that could take years to pay off and could hobble your business in the long run.
And even if you can borrow cheaply, it’s really not flexible. If you borrow $500,000, you pay interest on the entire amount, whether you use it or not. This can place you in a tough spot: if you use too little, you’re wasting all those interest payments, but if you use too much, you could be in serious trouble when a downturn hits and struggle to pay back all the loans.
Another idea is equity – Sell a portion of your company to an investor and get cash in exchange for giving up a portion of your business. Sounds good, right? No more interest payments to worry about!
Equity investments take time. Finding the right investors can be hard. After all, these will be the people that would be writing you a cheque and be your business partners. Before they can trust you, they may want to see financial statements, understand more about your suppliers and customers, and go through hours and hours of negotiations regarding how much your company is worth.
With equity, the dilemma remains: A small equity investment may not bring in the amount you need and not worth the trouble it brings, but a large equity investment means you are giving up a large part of your business and future upside.
What if there was a way to combine the best of both worlds to raise cash? A way which is quick like debt, but flexible and cheap, and one that doesn’t need you to give up any part of your business.
With Constrafor, there is. The trick is to use the one asset which subcontractors often overlook: invoices.
How does it work? When you complete work and send the invoice to your client, your client doesn’t not pay immediately (the average payment in construction takes more than 80 days). This means during that entire time, your money is sitting in the client’s account rather than in yours. Invoice financing unlocks the potential of these funds by using these unpaid invoices as collateral for a loan, providing you with immediate funds in exchange for a clear, defined upfront fee. In other words, Constrafor’s Early Pay Program helps you get paid in days, not months, after invoice approval.
Why is invoice financing the best option? Because it gives:
It’s time to think outside the box to finance your business. Invoice financing is the best low-risk financing method available to your business, combining the qualities of both debt and equity, and adding on top amazing flexibility and scalability. Let Constrafor’s Early Pay program unleash the potential within your invoices and solve your cash issues today!
Our Early Pay Program is quick like debt, but flexible and cheap, and doesn’t require that you give up any part of your business. Book a meeting with our Early Pay Program experts to learn how you can finance your business without taking on new debt.