Which funding products does this apply to?

Working Capital, Invoice Financing, Asset-Based Lending. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Is this specific to construction?

It is written around how a construction business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

Can I factor construction invoices and progress billings?

Factoring construction receivables and progress billings

It is done, by specialists, and it is harder than factoring a delivered load or an approved timesheet — for reasons built into how construction gets paid.

By Find Me Funders research desk Updated 14 September 2026 1064 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

Can I factor construction invoices and progress billings?

Yes, but fewer factors will do it and the terms are tighter, because construction receivables carry retainage, pay-when-paid clauses, lien rights, offsets and progress billings that can be revised after the fact. Expect lower advance rates, exclusion of retainage from the eligible base, a requirement for signed and approved payment applications rather than your own invoices, and heavy documentation around lien waivers. A factor that does not understand your trade's payment chain will create problems on your projects, so specialisation matters more here than price.

Construction breaks most of the assumptions that make a receivable easy to buy. A factor is buying a promise to pay, and in construction that promise has conditions attached to it all the way up the chain.

Why it is harder

Progress billing is not a finished invoice.A payment application is a claim for work performed to date, subject to the owner's or general contractor's review, certification and adjustment. The number on it can change after you send it.

Retainage.A percentage of every payment is held back until completion, sometimes for many months after your work ends. Factors almost always exclude retainage from the eligible base, so the advance is calculated on the net amount only.

Pay-when-paid and pay-if-paid.Your subcontract may make payment conditional on the general contractor being paid by the owner. A receivable that is conditional on a third party's payment is a much weaker asset, and the enforceability of these clauses varies by state.

Offsets and backcharges.Damage claims, cleanup charges, delay costs, coordination failures. Under UCC 9-404 an assignee generally takes subject to the claims the account debtor could assert, so a backcharge follows the invoice to the factor and comes back to you.

Lien rights and waivers.Payment usually requires conditional and then unconditional lien waivers from you and often your own suppliers and subs. A missing lower-tier waiver stops payment on an otherwise clean application.

Change orders.Work performed on a verbal instruction and billed without a signed change order is a dispute waiting to be discovered at verification.

What a construction-capable factor will want

Signed and approved payment applications, not just your invoice — typically the standard application and certificate for payment with the continuation sheet.
The schedule of values and the executed subcontract.
Conditional and unconditional lien waivers as required.
Certified payroll where the job requires it.
Evidence of the general contractor's or owner's approval of the amount.
Sometimes joint check arrangements with your suppliers.

What to expect in the terms

Retainage excluded from eligibility.
A lower advance rate than a trucking or staffing facility, reflecting dispute and offset risk.
Tight concentration limits, which bite hard in a trade where one project can be most of your ledger.
Verification with the general contractor's project accountant rather than a general AP inbox.
Cross-aging that can take out an entire project's receivables over one contested application.

The arithmetic on one payment application

Illustrative only — a payment application for 100,000 of work, with 10% retainage held, so 90,000 is currently billed. The factor excludes retainage and advances 80% of the net: 72,000 to you, with 18,000 sitting in reserve. The discount is 2% per 30 days and the general contractor pays in 60, so the fee is 3,600. Then the GC issues a 6,000 backcharge for site cleanup and pays 84,000 instead of 90,000.

Your reserve release is 18,000 less the 3,600 fee less the 6,000 backcharge, which is 8,400. You have received 80,400 against 100,000 of certified work, and the 10,000 of retainage is still out — payable, if the contract runs to form, months after the job closes.

Nothing in that sequence went wrong. It is the normal shape of the transaction, and it is why advance rate alone tells you very little. Run the same four lines on your own last three pay applications before you sign a factoring agreement, using your real retainage percentage and your real payment days.

Two edge cases that stop payment cold

The lower-tier waiver.Your own unconditional waiver is not enough on most jobs. If your supplier or your sub has not delivered theirs, the GC holds the whole application, and your factor is now sitting on an unpaid advance for a reason that has nothing to do with your work. Build the waiver chase into your billing cycle, not into your collections cycle.

Your lien and notice deadlines do not pause.Preliminary notice and mechanics lien deadlines are set by state statute and they run on their own clock regardless of who holds the receivable. A factor is generally not going to preserve your lien rights for you, and assigning the account does not extend anything. Ask, in writing, who is responsible for notices and what the factor expects of you — then diarise the dates yourself and take advice on them in your state.

Before the notice of assignment goes out

Your subcontract may say the account cannot be assigned. Under UCC 9-406 the uniform text makes certain anti-assignment terms ineffective as between you and the factor, which is not the same as making the job go smoothly. The general contractor still controls certification, still holds retainage, and still has to be told where to send money.

Tell the project accountant yourself, before the factor's notice arrives, and ask which of their processes the change touches: the pay application routing, the joint check list, the waiver forms, and the vendor record. A notice that lands cold on a GC who was not expecting it is the fastest way to have your next application sit on someone's desk.

Choosing a provider

Specialisation matters more here than the discount rate. A factor that has never seen a schedule of values will slow your payment applications down, will verify with the wrong person, and will misread a routine retainage holdback as a dispute. That costs you more than a few tenths of a percent.

Ask directly:

How many construction clients do you have, and in which trades?
How do you handle retainage — excluded, or funded at a lower advance on release?
Do you verify with the general contractor, and who do you speak to?
How do you handle lien waivers and joint checks?
What happens to funding when a payment application is revised downward after I have been advanced against it?

Question five is the one that separates providers who know the trade from those who do not.

The alternative worth pricing

Because construction receivables are difficult, some contractors do better with a facility built around the project rather than the invoice — mobilisation funding, a line sized to the contract, or supplier terms negotiated against the schedule of values. Price at least one of those alongside a factoring quote before deciding.

Factoring construction receivables and progress billings