Electrical Contractors Get a Spark from Invoice Factoring
The electrical contracting sector is going through a mini-boom around Australia. Many of the activity is driven by the wiring of schools around the world to upgrade their technology infrastructure; and, there is considerable work in the flood ravaged areas in Queensland and Victoria to re-wire the homes and buildings that were so badly impacted earlier in the year.
Electrical contractors may also be challenged to perform the work through hiring well-trained staff. From a cash flow perspective, electrical contractors also have to pay for the myriad of supplies (cables, wiring, etc. for the job even though they will only be paid for the work 30, 45 or two months following job was completed.) This tends to put tremendous pressure on the business’ finances as most of the electrical contractor businesss are small enterprises who will not have large balance sheets.
Nearly all electrical contractor jobs are controlled by larger businesses who then hire out smaller electrical contractors to do portions of the work. It may be indicated in the contract that the standard terms of payment will be given to the electrical sub-contractor 1 month from the end of the month where the work is done.
Invoice factoring facilities are being established by many electrical contractors that are responding to this difficult periods aiding them the working capital they may need in meeting the demands of the marketplace which have long the payment schemes. Because sources of collateral as progress claims especially instances invoice factoring allows the electrical contracting firm to get a line of credit to utilize its invoices.
The invoice factoring company would require a copy in the Purchase Order (PO) from the jobs the place that the invoice was created. This gives the proof that that customer has ordered the job to be done and sets the scope so that the factoring company can understand the size of the project and whether any variations are ultimately performed.
For advance, the invoice factoring company will pay the electrical contractor a share of the invoice or progress claim. To hold the business ticking along nicely, this advance has been used to pay the staff and the suppliers. In the current tight labour market, having the cashflow to make certain that staff is paid every fortnight is essential to the continuity of an electrical contracting business.
Call The Interface Financial Group (IFG) at numbers 1300 957 900 to learn more about invoice factoring in the electrical contracting industry.
