Construction invoice finance that understands valuations.
Cash in construction gets stuck in applications, certifications and retentions. See which participating UK lenders could fund your ledger, and what they would count as fundable.
No obligation. Your customers won’t be contacted as part of the comparison process. Facilities from £25,001.
- Applied for
- £60,000
- Certified by the main contractor
- £54,000
- Retention held at 5%
- −£2,700
- Net certified value
- £51,300
- Could be released at 70%
- £35,910
What is construction invoice finance?
Construction invoice finance is funding against money owed to a construction business, such as certified applications for payment or invoices for completed work. It works like other invoice finance, but lenders adjust for retentions, set-off and stage payments.
Standard invoice finance assumes an invoice is a settled debt for work that is finished. Construction rarely works that way. Payment usually follows a valuation, the paying party can issue a pay-less notice, retentions are held back, and contra-charges can be set against what you are owed.
That is why construction is one of the harder sectors to fund, and why many general lenders exclude it. Specialist lenders do fund construction ledgers, particularly for businesses whose invoices look more like standard trade debts.
Suppliers of materials, plant hire firms and trades invoicing for completed work usually find it easiest. Subcontractors on long, staged contracts can still find options, but expect lower advance rates and closer scrutiny of contracts and payment history.
How construction invoice finance works
Where lenders fund applications for payment, the cycle tracks the valuation process.
- 1
You apply for payment
You submit your application or invoice for the period, in line with your contract.
- 2
The value is certified
The main contractor or client issues a payment notice confirming the certified amount.
- 3
The lender advances cash
The lender funds an agreed percentage of the certified value, after deducting retentions.
- 4
The payer settles
When payment arrives, the balance is released less fees. Retentions are handled separately.
Which construction businesses it suits
How fundable your ledger is depends on what you invoice for and how payment is agreed in your contracts.
Usually a good fit
- Builders’ merchants and materials suppliers invoicing on delivery
- Plant and equipment hire businesses
- Trades invoicing for completed, signed-off work
- Subcontractors with certified applications and a record of low disputes
- Businesses working for large main contractors or public bodies
Worth checking first
- Most of your income comes from uncertified or disputed applications
- Contracts give the payer wide set-off or contra-charge rights
- Retentions make up a large share of what you are owed
- One main contractor accounts for most of your ledger
- You work mainly for homeowners rather than businesses
What affects construction funding
Construction lenders read your contracts as closely as your ledger. These are the points that shape what they will fund.
Certification
Certified applications and payment notices carry more weight than amounts you have applied for. Keep the paper trail tidy.
Retentions
Retentions, commonly 3 to 5%, are usually excluded from funding and may only be released after practical completion or the defects period.
Set-off and contra-charges
The right to deduct amounts for delays or defects reduces what a lender can rely on, so advance rates tend to be lower.
CIS and payment terms
Construction Industry Scheme deductions, long payment terms and staged billing all affect how much of each invoice counts.
Construction funding compared
How your invoices are structured decides which type of facility is realistic.
| Factoring for completed work | Invoice discounting | Application-based construction finance | |
|---|---|---|---|
| What is funded | Invoices for delivered goods or finished work | The whole eligible sales ledger | Certified applications for payment |
| Who collects | The lender | You | Usually the lender |
| Typical fit | Suppliers, hire firms, trades | Established firms with strong credit control | Subcontractors on staged contracts |
| Advance rates | Closer to standard rates | Depends on ledger quality | Usually lower, reflecting set-off risk |
| Availability | More lenders | Selective | Specialist lenders only |
Available products and terms depend on your business, sector, turnover, debtor ledger and lender criteria.
Find out which lenders will look at your ledger
Rather than approaching lenders who may exclude construction outright, Factor Now checks your business and debtor ledger against participating lenders’ criteria and shows who could be a fit.
- 1Tell us about your businessWe verify available Companies House information automatically.
- 2Upload your aged debtor reportIt shows who owes you, how much and for how long.
- 3See matching lenders instantlyYour ledger is checked against participating lenders' criteria.
- 4Compare indicative funding and pricingNo waiting for quotes or callbacks.
- 5Progress with the lender you chooseContinue through to formal offer on Factor Now.
| Customer | Current | 1–60 | 61–90 | 91+ |
|---|---|---|---|---|
| Northgate Engineering Ltd | £26,064 | £66,557 | £6,093 | £1,693 |
| Brightway Supplies Ltd | £20,800 | £49,965 | £5,643 | £1,171 |
| Meadowbrook Foods Ltd | £31,129 | £72,750 | £9,771 | £3,729 |
| Total | £77,993 | £189,272 | £21,507 | £6,593 |
Export it from Xero, QuickBooks, Sage, FreeAgent or most other accounting systems. Older and concentrated debts affect how much of a ledger lenders will fund.
Construction invoice finance questions
Can you get invoice finance for construction?
Yes, but options are narrower than in most sectors. Suppliers, hire firms and trades invoicing for completed work usually have the most choice. Businesses billing through applications for payment need specialist lenders.
Can I fund applications for payment?
Some specialist lenders fund certified applications, normally at lower advance rates than standard invoices. Uncertified or disputed applications are rarely funded.
Are retentions funded?
Usually not. Retentions are generally excluded because they are only released after practical completion or the end of the defects period, and can be reduced by claims.
How does CIS affect invoice finance?
Under the Construction Industry Scheme, contractors may deduct tax from payments to you unless you have gross payment status. Lenders fund against what they expect to receive, so CIS deductions reduce the fundable amount.
Why do many lenders avoid construction?
Payment in construction depends on valuations, pay-less notices and set-off rights, so the amount finally paid can differ from the invoice. That uncertainty makes lenders cautious.
How much can I release?
It depends on the type of invoice and lender. Standard invoices for completed work can attract rates close to other sectors, while certified applications usually attract less. Facilities through Factor Now start from £25,001.
Does Factor Now lend?
No. Factor Now is a technology platform, not a lender. Participating lenders carry out their own checks and provide the facility.