Archives December 2015

Factoring for Contractors and Subcontractors

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FACTORING FOR CONTRACTORS AND SUBCONTRACTORS

Construction companies and more particularly subcontractors often have cash flow problems due to slow payments. They have a continuing need for payroll, overhead and equipment cost. Small and new companies struggle to get paid in a timely fashion; however if you have cash flow problems factoring can be a godsend.

As a new or small company what are your options, bank loans are difficult for new companies and the paperwork can be overwhelming. A bank will need to see assets, good collateral, and a record of profitable operations before you have a chance of receiving a bank loan. With factoring, you don’t take on any debt. You simply get cash now while the factor waits on your payment.

With factoring, your credit is not the issue; it is your customer’s credit that the factor relies on for payment unlike a bank. You will continue to need cash to cover payroll, equipment charges etc. With factoring your company will have the necessary funds to continue business as usual and grow at the same time.

Don’t get caught having to wait up to 90 days for a bank loan to complete a job It is likely that your client will get someone else to finish the project and you may not get paid for the work completed and lose your good reputation. Factoring will get you money in a matter of days.

Starting a job with low cash flow can be dangerous. There always seems to be an extra expense and then you are in financial trouble and may not be able to complete the job, meet your payroll or equipment rental cost.

You can’t do your best for your client if your cash flow is late or slow. You must give your client your very best and you can’t if your cash flow is not meeting your needs. With factoring you will have the financial solutions to continue and grow your construction business.

Let’s talk and see if we can help with your cash flow.

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Government Contract Financing

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Are you a small business owner selling to a government agency or do you want to sell to the government? Government contract financing can be a very effective way for companies to fund the operational costs associated with doing business with governments. Each year governments contracts for several trillions of dollars’ worth of goods.

While it can be a great feeling to be awarded a government contract, it can be quite expensive to complete assigned jobs. Some companies will struggle to cover operational costs of a particular project and still fund other projects and jobs.

Working capital can become a major problem for your company and cause financial problems. There may not be enough funds to meet payroll and cover continuing overhead. To meet these cash demands you can sell your government contract invoices to a factoring company.

After a company has finished a government contract job, they will prepare and send an invoice. The government may not pay right away. In fact, it could take 1-3 months before they send payment. In the meantime, the company will be out of the money that went towards operational expenses to complete the job. Without any income directly from this job, the company could be cash poor. For a large company with a good deal of income, this may be a bit inconvenient but it won’t put their company at rick or cause them to be unable to fulfill other commitments or jobs.

However, for a smaller business, having to wait 1-3 months to get paid for an expensive job, this could effectively shut down their operations, making it impossible to generate any other additional income. Government contract factoring gives them a way to get the money they need to sustain their business.

This type of factoring sells the invoice of completed government contract jobs. A company would be effectively selling incoming monies. The factor, or the company that buys the government contract invoice, will handle collecting the money. This might involve them sending the government written correspondence or call them on the phone.

The invoice is sold at a discounted rate. For example, a seller may require that the factor funds 90% of the billed amount on the invoice. Once the factor can collect all of the money, they will give the remaining, in this case, 10% back to the seller. However, the seller won’t see all of this because the factor will charge a few points to cover the services. The factor may also hold a percentage in reserve.

A company that has won and completed a government contract may be willing to sell the invoice from the job to get cash needed to continue fulfilling the contract. If a company needs money after completed government contract and can’t wait 30-90 days to receive payment, they may be willing to sell the invoice to a factoring company to get money right away.

Let’s talk and see if we can provide a solution to your cash flow issues.

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Our Broker Program

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MID-CONTINENT FINANCIAL SERVICES BROKER PROGRAM

Do you know of someone who could use factoring to improve their cash flow? We are broker friendly and happy to work with factors, CPAs, attorneys, insurance agents, business incubators and others who can refer clients to us. We pay a commission for referrals up to 10% of our gross receipts from the deal and for as long as we have the client.

We make it easy for you, as all we need is a name and contact information, then we handle the rest of the details. Just for the referral you can get a check every month for as long as we factor the client.

If you know a business that’s growing but cash flow is slowing, refer them to us and we can help their business cash flow and send you a referral fee.

Factoring can help businesses in many ways including:

Pursue Better Contracts to Increase Sales

Instead of waiting for payment after delivering your last project, you can factor that invoice and get cash sooner. That can free up cash flow to go after bigger, better projects that will help grow your business.

Greater Purchasing Power with Your Suppliers

With more cash on hand, you can negotiate better rates from suppliers to get a better deal on products for your business. You can purchase larger quantities or pay with cash for that better deal.

Controlling Operating Costs

You can factor invoices when you need the cash. You choose when you need factoring and can get the cash flow now instead of waiting 30, 60 or 90 days.

Build Business Credit

With factoring you don’t need to take on additional debt. A factor will not look at your credit history; it looks at your customer’s credit history. The improved cash flow from factoring can help you pay off existing debt as well.

What We Do

Accounts Receivables & Invoice Financing

Purchase Order Financing

We can Finance up to 92% of the Invoice

We will Treat Your Clients and Their Customers with Care

Our Target Clients

Any Business with Slowing Cash Flow or Other Cash Needs

Contact us to discuss brokering you customers

Why Broker with Mid-Continent Financial Services, LLC

We have years of experience working with difficult financial situations.

We can find solutions using account receivables factoring, purchase order financing, line of credit, asset based lending and many other financial instruments to assist your customer’s cash flow.

Let’s talk about our financial solutions and establishing a broker relationship.

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