As an example, let’s say your business is working on a large infrastructure project. On the project your payment terms with the contractor are 30 days, but your workers are paid weekly. The invoices regularly require chasing and are often paid closer to the 60-day mark with some falling even into 90-days.
The contractor has asked you to add further people to the project and you need to hire more staff, additional your requested to add another excavator to the project. All while maintaining your obligations to existing staff and customers. You are a relatively new player in the market and the bank will not increase your business overdraft.
Your new client, however, is a large civil construction & engineering company and can be defined as a ‘high quality’ debtor, meaning lower risk to the financier. You have the opportunity to turn your unpaid invoices into cash (as soon as they are approved), meaning you can get working capital back into your business faster, steadying your cash flow and allowing you to meet your existing, as well as your new obligations.
Who benefits from this type of lending?
This form of financing is designed to help subcontractors and all businesses that use progress claim billing to improve cash flow and increase liquidity. Funding is available to business operating under the Securities of Payment Act, that bills progressively and submits progress claims to other businesses with large construction or civil contracting companies.
Progress Claim Finance is a flexible funding solution designed to meet the needs of businesses that use progress claim billing.
WHAT ARE THE ADVANTAGES OF PROGRESS CLAIM FINANCE?
Compared to a traditional overdraft or business credit card, Progress Claim Finance offers several advantages, including:
- Fast cash injection to provide working capital
- No real estate security required like your home
- Flexible funding that grows in line with the needs of your business
- Much easier to access than a traditional loan or overdraft
- Submit one or multiple invoices for funding
- Funding limits up to $750K
The most significant advantage of Progress Claim Finance is that it allows you to get paid faster for the work you have already completed. You’ll have enough liquidity to keep projects moving forward.
HOW DOES IT WORK?
A Progress Claim Finance facility allows you to use your outstanding customer progress claims to secure immediate funding. Here’s how the Progress Claim Finance process works:
- Submit your monthly progress claims and invoices to your customers and send copies to the financier
- On receipt of customer payment schedules or recipient created tax invoice, the lender advances the funds up to 70% against the certified value within 24 hours
- Once your customer has completed the payment, the remaining 30% minus a small fee is made available to you
For more information about how we can help your business, call and one of our consultants will answer all your questions.
Get in touch with us today and experience the Berra difference.