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Invoice Finance in the construction industry

As far as we are aware there are only two finance companies providing invoice finance to the construction industry. This is because construction tends to be very contractual and the majority of invoice discounting and factoring companies don’t understand it.

One of the providers is a high street bank and depending on the knowledge of your point of contact  we have had mixed reports as to their ability to provide a decent service. The other provider is one of the larger independents and their level of service is more consistent.

The problem with contractual invoicing is that that amount and value of work undertaken at a particular point can be very subjective. Most invoice finance companies don’t want to get involved with disputes over work undertaken in relation to larger projects.  As a rule the high street bank will only advance against certification whereas the independent will provide funding on application of the invoice. Due to the nature of the debt prepayments to be at a lower level than normal factoring or invoice discounting. Traditionally invoice finance will release up to 85% of your unpaid invoices however with these contractual deals it may be allot lower.

If your business is quite large than as a rule of thumb we would recommend the independent because they appear to have the consistency in understanding ow the invoice is structured. They also have their QS working for them to verify  the invoices if need be. The bank may provide a higher headline prepayment however in reality they are not as good as collating stage payments and as such they are more likely to disallow certain invoices and payments.

On the other hand if your business is relatively small the bank provider takes a view on their overall portfolio and as such if they fell they have a good mix of customers they may not look too closely as to what and ow you are invoicing and such you may end with more cash.

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XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

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