How construction firms can benefit from invoicing financing

Maintaining a steady cash flow in a construction company can be difficult. Invoice financing is a great way to access more funds immediately. But what exactly is invoice financing, how does it work and what are the benefits your company can leverage from it? 

Find out if invoice financing is the right form of lending for your construction company. 

What is invoicing financing?  

Invoice financing is a type of loan made against future payments. The lender uses an unpaid invoice as security for funds.

How does invoice financing work?

An example would be a £10,000 payment from a customer to a construction firm. The client has put terms of payment of 60 days on paying the invoice. This locks the construction company out of their funds for up to 60 days. 

By having an agreement with an invoice financer, the company can access up to 95% of the invoice amount immediately through bank transfer. While the lender holds on to the invoice and receives the full payment in a trust account controlled by the lender 60 days later.

How construction companies benefit from invoice financing

Provides financial certainty

Invoice financing can help you overcome cash flow problems. It can be a challenge to overcome the strict payment periods of 30 to 90 days clients place on invoices. This leaves the construction business with financial uncertainty. Invoice financing can dispel this uncertainty and provide you with quicker access to your funds. 

Unlocks cash for milestone projects

This form of financing is particularly helpful on milestone construction projects. A lot of construction firms find it difficult to access funding to buy the materials for the next milestone in the project after completing the previous stage. Finance invoicing will allow you to complete milestone projects seamlessly as your cashflow won’t be stuck behind a milestone goal, such as an application for payment

Streamlines payment processes

Invoice financing also frees you up from having to chase invoices to meet your deadlines. Meaning you can concentrate your attention and efforts where they matter most. This saves you costly delays on development projects.

Speedy Access to Funds

Invoice financing is a quick way to access cash in an emergency. Up to 90% of the funds will be transferred to your bank account within 24 hours. This flexible type of lending is great for dealing with those unseen hiccups in cash flow management.

Types of invoice financing

Invoice Factoring

Invoice factoring hands over credit control responsibility for the involved invoices to the lender. So, it is up to them to collect any payments. It is a great service to use if you are looking to free up the time you spend processing and chasing invoices.

The downside of this service is that your customers will be aware you are using it.

Invoice Discounting

With invoice discounting the credit control responsibilities remain with your business. This is the easiest and most basic form of invoice financing. It is also a discreet form of lending that your customers will not be aware of.

The benefits of invoice financing

  • Speedy process – that unlocks up to 90% of funds in 24 hours
  • Invoices are the security – no need for additional collateral
  • Scalable form of lending – as turnover grows so does your cash flow
  • It is a flexible form of lending
  • Improves cashflow for your business
  • Bad Debt Protection can be added to protect against non-payment

Full Metal Finance is dedicated to supporting construction firms by providing construction companies cashflow solutions and financing services. Our advisors have experience working with various services in the construction industry to bolster their cashflow. Our account managers work with your business on an individual basis to provide you with the tailored support you need to grow.

If you are having trouble getting a conventional bank loan or asset finance, our asset-based lending service can lend you a helping hand. Contact us today to see if invoice financing is the right cashflow solution for your business.

Boost Your Construction Business’ Credit Score For Better Finance Deals

Proven Tactics to Strengthen Your Financial Foundation and Unlock Better Funding Options

A strong credit score is crucial for construction businesses looking for good finance deals for equipment purchases. It not only means lower interest rates but also shows that you handle money wisely. In this blog, we’ll look at practical ways for construction businesses to improve their credit and get better finance deals.

Prioritise Reviewing Your Credit Report

Before we get into the nitty-gritty of boosting your credit score, take a moment to look over your credit report. This step is like the foundation of a building – it sets everything else in motion. Get your report from trusted credit agencies so you can see where you stand financially. This may differ whether you are a sole trader or a Limited company, so be sure to check.

Go through the report carefully, keeping an eye out for any mistakes or things that don’t add up, like wrong account details or payments that are being disputed. Fixing these issues is vital as it can make a big difference to your credit score. This careful approach makes sure you’re working with accurate and solid financial info, which will make the rest of the process much smoother.

Make Sure You Pay Your Bills on Time

Paying your bills when they’re due is a big deal when it comes to showing how reliable you are with money. Being on the ball with payments is a sign of being smart with your finances. If remembering due dates isn’t your strong suit, think about setting up automatic payments or using reminders to make sure you never miss one. This way, you’ll be on top of your financial game, and it’ll reflect positively on your creditworthiness.

Manage Your Credit Card Balances Wisely

It’s smart to keep an eye on how much you’re putting on your credit card. Pushing the limit can bring down your credit score, so keep things balanced by aiming to use no more than 30% of your credit limit. Getting that credit card debt down is a quick way to give your score a boost. So, remember to keep those balances in check and watch your credit score rise.

Be Cautious When Applying for New Credit

When you apply for new credit, it’s like a little flag on your credit report. Too many of these flags in a short time can actually bring your credit score down. So, be careful about signing up for new accounts. This way, you’re protecting your credit score and making sure it stays in good shape. If you are looking to make multiple purchases within a short period of time (say, 90 days), it may be worth applying at the same time, to reduce the number of searches. We call this a credit line facility.

Retain Old Credit Accounts

How long you’ve had credit is a big deal for your credit score. Closing old accounts can actually make your credit history shorter, which might bring your score down. So, even if you don’t use them all the time, think about keeping those old credit accounts around. They’re like little anchors that help keep your credit score steady. Just be sure there are no unnecessary costs involved with holding the account open.

Be Thoughtful About Debt Consolidation

Debt consolidation can be a helpful move, but it’s important to think it through. When you combine different accounts into one, it might mess with your credit balance, which could bring your score down a bit. Before you make any big changes to how you handle your debt, it’s a good idea to get advice from a professional. They can help you figure out the best way to go about it without putting your credit score at risk. Also, be mindful of early repayment fees, as you may end up incurring ‘double interest’ if you are not careful.

Nurture Strong Business Connections

Building solid connections with suppliers, subcontractors, and other partners can bring about better credit terms. Paying on time and keeping the lines of communication clear and open can help create trust. This trust can be key to unlocking even better financing opportunities for your business. So, invest in those relationships – they might just pay off in more ways than one.

We Can Help

Boosting your construction business’s credit score is a savvy step that can make a significant difference in securing better finance deals. By following these approaches and maintaining responsible financial management, your business will be in a stronger position to tackle new projects and investments with confidence.

At Full Metal Finance, we understand that credit scores can often be a significant hurdle to growth. We pride ourselves in working with clients of all credit profiles and excel in assisting businesses grappling with less-than-ideal credit scores. Not only can we help you to secure financing, but we do it in a manner that is both financially sound and sustainable. Our expertise lies in tailoring solutions that align with your unique needs and circumstances, ensuring that financial empowerment remains within reach, regardless of credit history. Full Metal Finance isn’t just a financial partner; we’re an ally dedicated to helping your businesses thrive, no matter where you stand on the credit scale.

Get in touch

Ready to elevate your business’s financial standing? Get in touch with Full Metal Finance today and find out how we can help you start implementing these strategies and pave the way for a brighter future.

Steps to Take as a Start Up to Secure Finance

As inflation continues to rise, securing finance is a crucial step for any start-up looking to grow and thrive in today’s competitive business landscape. Funding is often the make or break for a new company as it acts as its lifeblood, enabling it to fuel its operations, invest in research and development, and scale the business.

However, securing finance can be a daunting task for entrepreneurs who have had little exposure to the task, so we have compiled steps you can take to increase your chances of securing finance and put your business on the right track.

Step 1: Define your Equipment Needs and Rationale

Before seeking finance, it is crucial to have a clear understanding of what your start-up actually needs the finance for. Begin by clearly outlining the equipment you require and the rationale behind each purchase. Highlight how the equipment will enhance operational efficiency, increase output, or allow you to take on larger projects. This rationale establishes a strong foundation for securing asset finance.

Step 2: Showcase Industry Expertise

Evident industry experience plays a pivotal role in gaining asset finance approval. Lenders are more likely to provide financing if you can showcase a track record of successful projects in the construction sector. Highlight some of your completed projects and emphasise your team’s expertise. This evidence demonstrates your capability to leverage the equipment effectively.

Although you may not have a lot of industry experience as a start-up, lenders will appreciate any sort of successfully completed projects, or projects that are in progress but forecasted to be successfully completed in the future. Lenders will also take a view on prior industry experience.

Step 3: Demonstrate Repayment Ability

Lenders assessing asset finance applications want assurance that their investment will be repaid. To instil confidence, showcase your construction business’s financial health, revenue streams, and projections as best as you can.

Step 4: Pick the Right Finance Option for you

Select the most appropriate financing option based on your construction business’s needs. Hire Purchase and Finance Lease are the two most popular options. Hire Purchase allows you to spread the cost over time while eventually gaining ownership, while Finance Lease provides flexibility and potential tax benefits. Assess each option’s impact on your financials and choose the one that aligns with your long-term goals.

Learn more about each option here.

Step 5: The Smarter Option

As a financial broker, we understand that these steps can be overwhelming, as each step takes a lot of thought, time, and even finances. We take the stress off your shoulders by working with you to gather all the relevant details required to get an application submitted, then utilise our list of over 70 lenders to get you the best possible deal out there in as short a timeframe as possible; we have secured numerous deals in as little as 10 minutes! Applications are subject to status and approval.

We have worked with hundreds of clients, many of which have come back for more due to the quality of service and the deals we are able to secure. Just take a look at our Trustpilot reviews to get an insight into how we work. Get in touch with us today to see how we can help, no strings attached.

What is a Construction Equipment Finance Broker?

Construction equipment brokers don’t half make things complicated sometimes. Whether it’s high rates or unnecessary paperwork, you can work your fingers to the bone by simply signing up. That frustration is the reason Full Metal Finance was born, offering clear, valuable and effective services to our clients. Our motto? ‘If it leaks oil – we’ll fund it’. 

First things first, a construction equipment finance broker assists companies with finding the right finance deals that enable them to purchase or hire equipment. For Full Metal Finance, this extends to business loans, director’s cars, invoice financing and cashflow funding.

Going straight to the bank for loans can prove slow and awkward, but using a finance broker opens up your opportunities to more lenders and, more often than not, better deals. 

To help you get to grips with how construction equipment finance brokers operate and what you need to look out for, we’ve gathered a quick list with all the information you’ll need.

Complete market access

Without complete market access, you’re going to be left in the mud. As one of the UK’s fastest-growing independent finance providers, Full Metal Finance has got full access to a wide range of markets, not just tied to your bank. Whether you’re searching for diggers and dumpers or cars and commercial vehicles, we’ve got your back. Essentially, we have full market access for any piece of metal machinery you’re after.

Terms that suit you

When searching for a construction equipment finance broker, the terms should always suit you. Here at Full Metal Finance, we explore other ways of financing deals, including VAT deferrals, seasonal payments and NIL deposits. Tunnel vision is never good when operating as a broker – that’s why we remain versatile when financing deals.

Private or dealer sales

Versatility is the name of the game if you’re going to be a valuable construction equipment finance broker. Thankfully, that isn’t a problem for us. We have and continue to work with some of the biggest manufacturers in the UK, including Doosan, Bobcat and Avant, among many others. These relationships run deep and are built on solid foundations. Private or dealer sales, we’ve got your back.

Transparent costs of finance

When supplying any kind of financial service, transparency should always be on the table. Working with Full Metal Finance means transparency is vital – it’s a part of who we are and plays a crucial role in all our offerings. You always have complete access to finances without any hidden fees, so you can plan ahead and stay in full control.

Value your time

We’re not here to build a house of cards. An equipment finance broker should do the heavy lifting for you with the value of your time in mind. When working with Full Metal Finance, accessibility and simple processes take up as little of your time as possible, providing clear and fuss-free applications. We always put the pedal to the metal when processing deals without sacrificing quality.

Trusted and 5* reviewed

Without trust, we’re nothing. When looking for a broker, digging deep into their history and reviews should be key. Our 25 years of experience and trust within the industry have helped make our business what it is, offering construction companies opportunities to build from the ground up. Ultimately, we let our reviews and feedback do the talking – take a look at our Trustpilot to see for yourself.

Negotiation on your behalf

Negotiation is a key part of any construction equipment finance broker. Thankfully, we’ve got negotiation experience in the bucket loads (25 years, to be precise). Our detailed knowledge of the industry allows us to make the best decisions possible in your interests, taking quality and value into account. After all, we wouldn’t be where we are today without great negotiation skills.

Building the foundations for your business for the future is what Full Metal Finance is all about. We’re in this for the long term. Interested in collaborating? Let’s get started. Get in touch with Full Metal Finance through our contacts page today to talk to one of our dedicated professionals.

Our Tips On How To Manage Your Cash Flow In 2023 And Avoid 2022’s Mistakes

When it comes to cash flow, the positives and negatives aren’t rocket science. Bad cash flow means you may not get the best rate of interest available, while excellent cash flow opens more finance options so you can invest in growing your business. It really is as simple as that, but the question remains – how can you efficiently enhance your cash flow?

Well – you’re in luck. In this article, we’ve put together some of our top tips in answer to that very question. Have a peek at our favourites below to help level up your business, while avoiding last year’s stumbling blocks in the process:

Dig deep to find the best finance options

All good things come to those who dig. The best finance options for your business aren’t always going to be staring you in the face. Sometimes spending that extra time researching can make a world of difference and positively impact your cash flow in the long term. Full Metal Finance, if we do say so ourselves, would be a great option in regards to finding those stellar finance options. We think outside the box, are dedicated to building credit and prioritise open and transparent communication with all our clients.

Spread the costs

Financing purchases is a terrific way to spread out the costs of your equipment while saving money for investing and day-to-day operations. It’s important to remember that you’ll still be responsible for interest charges but, as long as they are not unnecessarily steep, it’s still the perfect option for most companies. In fact, you may even be able to write off charges such as interest within your business expenses. A win-win.

Start team training on Cash Flow Management

Learning and Development (L&D) can get a bad rap for being a bit of a waste of time. However, we’re firm believers that it can make a big difference to company expertise and could be just what you’re looking for when developing new ideas for enhancing cash flow. Teaching your staff using external sources or organising group meetings with an expert within your own organisation will supply you with extra resources for improving operations. Before you know it, new ways to improve your cash flow will start popping up like daisies.

Trust us – if you can get everybody singing from the same hymn sheet, you’ll be on the path to success.

Don’t let Outstanding Day Sales slip by

This one might sound obvious, but many construction companies don’t realise just how impactful being paid late can be. On average, it takes between 60-90 days to get paid, which can negatively hit your cash flow (especially when this is done en masse). The solution? Be stringent with your clients before starting a project and make it a company goal to lower the number of days to receive invoices to 45 or under. Adapting payment methods for different customers could also be extremely beneficial.

Great accountants are lifesavers

What would the world be like without accountants? A lot more chaotic – that’s for sure. Great accountants can be the difference between positive and negative cash flow for your business. A tip-top accountant will have the ability to keep things ordered and organised (an essential trait) while having a deep well of knowledge about the construction industry to tap into. With ongoing changes to legislation within the industry, this could be crucial. A stellar accountant is an essential cog in a well-oiled machine, optimising and streamlining your cash flow.

Managing your cash flow effectively isn’t just useful, it’s potentially transformative. If you’re searching for help sourcing the best finance option for you, it’s time to get in touch with Full Metal Finance – we’re only a phone call away.

Hire Purchase And Finance Lease In The Construction Industry

When you need to upgrade or increase your construction equipment, asset finance can help you spread the cost over time and even include helpful terms such as deferring VAT or seasonal payments.

Hire Purchase and Finance Lease are popular finance solutions for purchasing new construction assets, but which is right for you?

Below, you’ll find our guide to understanding the key differences between the two products to guide you to the option that suits you best. Our Account Directors are on hand to take you through both products and any others that might suit your needs, too. Don’t hesitate to get in touch [link] for an impartial, no-obligation conversation.

Hire Purchase (HP)

Hire Purchase (HP) is a finance option where monthly payments are made over an agreed period to purchase a piece of kit. Essentially, you are hiring the asset from the finance company until you have paid off the entire amount owed, at which point you will own the asset outright. The amount you pay each month will depend on the value of the asset, the length of the agreement and the deposit you put down. Once you make the final payment, the kit is yours to keep. We offer both fixed rate and variable rate products.

One of the main advantages of Hire Purchase is that you have a clear understanding of the total cost of the asset, as the interest rate can be fixed for the length of the agreement. This means that you can budget accordingly and plan your finances. Additionally, as you are the legal owner of the asset, once you have paid off the entire amount, you are free to sell it and get some money back once you’re finished with it. Another popular option is to use the equity in the asset as a part exchange against an upgraded asset, keeping your fleet up to date, with minimal/ no upfront cost. We call this the upgrade-cycle.

Finance Lease (FL)

A Finance Lease (FL) is where you would make monthly payments to a finance company to rent an asset. Unlike with HP, you will not contractually own the asset at the end of the finance period.

Instead, you continue to rent the asset from the lender for a ‘peppercorn rental’ at the end of the finance period. Alternatively, you can appoint a third party to sell the asset to and recoup a high percentage of the sales proceeds.
An advantage of FL is that the monthly payments are plus VAT, meaning that you do not have to pay the full VAT upfront. This can be a bit easier on cashflow.

Hire Purchase vs Finance Lease

The main difference between HP and FL is who owns the asset over the period of the agreement. With HP, you are the legal owner of the asset once you have paid off the amount owed. But with FL, you do not have legal ownership of it. This means that you cannot sell the asset without the consent of the finance company.

Which Option is best for You?

It ultimately comes down to your personal needs and what you want from a finance agreement.

If you are looking for long-term ownership of the asset and want to have the freedom to sell the equipment whenever you wish, then HP may be the better option for you. Additionally, if you want to claim capital allowances on the asset, then HP is the only option.

But if you are a business looking to keep your equipment up to date, FL may be a better option as it allows you to refresh your fleet more frequently.

Weigh up your options, the advantages and disadvantages of both, and then compare that to your needs. Not forgetting, you should choose a reliable and reputable company to provide finance for you.

Full Metal Finance specialises in the construction industry. We have a wealth of construction knowledge, with over 30 years of combined experience across the team. We have proven that we are one of the best in the industry with over 200 five-star Trustpilot reviews and our abundance of long-standing customers.

If you are interested in securing HP or FL for a new machine, or maybe even another type of finance, then get in contact with us today and speak to one of our dedicated Account Directors.