Construction factoring
Contractors and subcontractors face retainage, progress billing, disputes, lien rights, and slow approval cycles.
Cash flow pattern
Billing can depend on progress applications, retainage, change orders, inspection, lien waivers, and pay-when-paid language.
Typical invoice documents
- Pay application
- Approved invoice
- Lien waiver
- Contract or subcontract
- Change order support
- Aging report
Common factoring fit
May fit clean, approved commercial invoices. It is harder when receivables are subject to retainage, conditional payment, or unresolved change orders.
Contract clauses to check
- Retainage exclusions
- Pay-when-paid provisions
- Lien waiver requirements
- Dispute and backcharge language
- Project concentration limits
Industry-specific risks
- Backcharges and change-order disputes can reduce collectability.
- Retainage may be excluded from funding.
- Lien rights and assignment language can interact with financing documents.
What factoring does not solve
- It does not speed up project approval.
- It does not remove retainage.
- It does not settle change-order disputes.
Related calculator: Factoring fee calculator. Use it for a local estimate only.
Related reading
Sources
- Uniform Commercial Code Article 9 - Uniform Law Commission. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.