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Construction invoice factoring can give you cash you need immediately, but how does it work? Learn more today and explore other financing options here: https://lvl.st/2JRz7M2.

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Check out more resources below.
How invoice factoring works: https://www.levelset.com/blog/factori...
Factoring related FAQs: https://www.levelset.com/payment-help...
How much does invoice factoring cost: https://www.levelset.com/blog/how-muc...
Top invoice factoring companies for contractors in the U.S.: https://www.levelset.com/blog/top-inv...

-How does invoice factoring work in construction?
In construction. Invoice factoring is a form to finance your construction business or provide money or cash to your company. For a construction company that provides labor or materials, normally how construction factoring would work is they would do their work or supply their materials and then generate an invoice. Upon the generation of an invoice that's approved, the construction company would go to a factoring company and then sell that specific invoice to the factoring company to get cash immediately versus having to wait. You can get your money as soon as one day, two days, or three days versus having to wait however long it would normally take to get paid for that work.

-What does advance rate mean in construction factoring?
The advance rate is what the factoring company will pay you at the moment you sell the invoice.

-What does factor rate mean in construction factoring?
Factor rate refers to the rate that factoring companies charge for a period of time for factoring the invoices.

For a practical example, let's say the labor that you're doing on the construction job is worth $10,000. You go to a factoring company and the advance rate that they're going to provide you is 80%; 80% of your $10,000 is $8,000, so you will get $8,000 in cash at the start. The factoring company will generally charge a rate for a period of time. In most cases, it will be around one to 3% for ease of numbers. Let's say it's 1% in this specific case; you're paying 1% for 30 days. So if it takes 30 days to collect that invoice, they will subtract the 1% they charged you from the remaining 20% that they withheld. Once payment is made, the factoring company will pay you the $2,000 minus whatever the factor rate that they charged. So in this case, it being 1%, that's $100 on the $10,000. Subtract that from the remaining $2,000; the factoring company will pay you $1,900 so that net cost to you to factor those invoices was only a hundred dollars.

Levelset’s mission is to empower contractors to always get what they earn. Levelset’s products help millions in the construction industry each year to make payment paperwork and compliance easier, get cash faster, monitor the risk on jobs and contractors, and better understand payment processes and rules. The results are faster payments, access to capital, and fewer surprises. Backed by investors like Horizons Ventures, S3 Ventures, Altos Ventures, Operating Venture Capital, and Brick & Mortar Ventures, Levelset is headquartered in New Orleans, Louisiana, with offices in Austin, Texas, and Cairo, Egypt, and is over 200 employees strong. Learn more at www.levelset.com.

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