Construction Invoice Factoring: Get Paid Faster on Every Project

Construction invoice factoring advances 70%-85% of approved progress billings, so you get paid on finished work without waiting out GC payment terms. Instead of carrying an invoice for 30, 60, or 90+ days, you sell it to a factoring company and get most of the value up front.

Construction runs on some of the slowest payment cycles of any factored industry — days-sales-outstanding for construction typically runs 60-90+ days, the longest of any sector that commonly factors. That gap between finishing work and getting paid forces contractors to either turn down new jobs or stretch cash flow thin. Factoring closes that gap.

For the mechanics of the product itself, see our complete guide to invoice factoring.

How Construction Invoice Factoring Works

1. Finish the work and submit a progress billing or final invoice, approved by the GC or owner.
2. Send the invoice to your factoring company along with proof of completion or delivery.
3. Get your advance — 70%-85% of the invoice’s face value, commonly same-day to within 24 hours once your account is set up.
4. Your client pays the factor directly, on the invoice’s original terms.
5. Collect the reserve balance — what’s left after the advance and the factoring fee (typically 2%-5% per 30 days; established, high-volume accounts often see 1.5%-3%).

Factoring is a sale of a receivable, not a loan — it’s priced as a flat factor rate, not an interest rate or APR, so it doesn’t add debt to your balance sheet.

Why Construction Companies Use Invoice Factoring

Cover payroll without delay. Your crew needs weekly pay; your GC may be on net-60 terms. Factoring closes that gap so you keep your crew and avoid turnover costs.

Buy materials for the next phase. Suppliers often want payment on delivery or within 15 days — your client’s payment terms don’t have to dictate your material schedule when factoring bridges the wait.

Take on larger projects. Stable cash flow lets you bid bigger contracts without fronting all the costs yourself; more invoices factored means more available working capital.

It’s not debt. Because factoring is a sale of an asset rather than a loan, it’s quoted as a factor rate, not an APR — and it doesn’t require the personal collateral a bank facility often does.

Who Qualifies for Construction Factoring

Factors underwrite the creditworthiness of your customers, not you. If your clients are established general contractors, developers, or government agencies with a track record of paying, you’re likely eligible regardless of your own credit history or time in business. That includes:

• General contractors on commercial or government projects
• Electrical and plumbing subcontractors
• HVAC installation and service companies
• Excavation and site-preparation contractors
• Roofing and framing crews
• Road and infrastructure builders

At REIL Capital, approval hinges on your customers’ payment history, not your personal credit score — whether you’re landing your first commercial contract or scaling a multi-crew operation.

Construction Factoring Rates and Advance Rates

Construction factoring runs about 2%-5% per 30 days for most contractors, with established, high-volume accounts often at 1.5%-3%. Advances run lower than most factored industries — 70%-85% of approved progress billings — because of retainage, progress-billing verification, and lien or back-charge risk.

Example: a $50,000 invoice at a 3% factoring fee costs $1,500. At an 80% advance, you’d get $40,000 up front. Once your client pays the full $50,000, you collect the $8,500 reserve balance ($50,000 minus the $40,000 advance and the $1,500 fee).

See our invoice factoring rates guide for how construction compares to other industries.

Apply now or call our team at 646-440-4100 to talk through your project’s funding options.

How to Get Started with Construction Factoring

1. Apply online — share basic business info and a sample invoice.
2. We underwrite their credit — yours isn’t the deciding factor.
3. Get approved — setup typically takes 1-10 business days, commonly 3-4.
4. Submit invoices as you bill and receive advances same-day to within 24 hours going forward.

Related reading: Staffing Factoring: Fund Payroll Before Your Clients Pay and Instant Business Line of Credit: Fast and Flexible Funding for Your Business.

Frequently Asked Questions

Can I factor progress billings, or only final invoices?
Many construction-focused factors, including REIL Capital, accept progress billings once the work is approved by the general contractor or project owner — we handle both progress and final billings.

Will my clients know I’m using factoring?
Yes. A notice of assignment goes to your client instructing them to pay the factor directly. It’s standard practice in construction, and most GCs and developers are familiar with it.

What happens if my client doesn’t pay the invoice?
Under non-recourse factoring, the factor absorbs defined credit-loss events, like the client’s bankruptcy. Under recourse factoring — the more common structure — you may need to buy back the unpaid invoice. REIL Capital offers both, depending on your client’s profile.

How does construction factoring compare to a line of credit?
A business line of credit usually requires strong personal credit, time in business, and several weeks of underwriting. Factoring qualifies on your customers’ credit instead, funds faster, and scales with your invoice volume — which is why growing contractors often use it alongside or instead of a credit line.