Invoice factoring for Florida contractors
Invoice factoring means selling your unpaid invoices to a funding provider at a discount, so you get cash now instead of waiting weeks for your customer to pay. It can work well for contractors, but construction billing has quirks that matter.
How invoice factoring works
- You complete work and submit an invoice or pay application, and your customer approves it.
- The factoring provider advances you a percentage of the invoice up front.
- Your customer pays the invoice according to its terms.
- The provider releases the remaining balance to you, minus its fees.
Because the decision leans on your customer's ability to pay, factoring can be available to contractors who would struggle to qualify for a traditional loan.
What is different in construction
- Approved invoices only. Providers generally want undisputed, approved invoices or pay applications, not work that is still in review.
- Retainage. Retainage held until project completion is often treated separately or is not eligible. Ask how the provider handles it.
- Lien waivers and notices. Providers may ask for paperwork such as lien waivers or notices tied to the job.
- Contract language. Some contracts limit assigning invoices to a third party. Public and government contracts have their own rules.
- Customer notification. Many arrangements involve telling your customer to pay the provider. Ask whether that is required.
Terms to understand before you sign
- Advance rate and fees. Providers advance a share of the invoice and charge a fee that may build up over time. Ask for the full fee schedule, including minimums.
- Recourse or non-recourse. With recourse, you may owe the money back if your customer does not pay. Non-recourse terms vary and often carry limits.
- Spot or ongoing. Some providers let you factor single invoices, while others require a contract covering all or most of your invoices.
- Written disclosures. Florida has a commercial financing disclosure law for certain providers. Ask for the disclosures in writing.
Factoring vs. a line of credit: a line of credit works best for recurring gaps and is usually cheaper if you qualify. Factoring tends to fit when you have strong invoices but limited credit history or collateral.
When factoring may fit, and when it may not
It may fit if you have large invoices from reliable customers, you wait a long time to get paid, and you want funding that grows with your billing.
It may not fit if most of your income is tied up in retainage, your customers dispute invoices often, or your contracts restrict assignment.
Common questions
Will my customer know I am factoring?
Often yes. Many programs notify the customer to pay the provider. Some arrangements are less visible, so ask about this before you sign.
Can I factor retainage?
Usually that is difficult, because retainage is not payable until the job is complete. Some providers handle it separately. Ask each provider.
How much do I receive up front?
The advance is a percentage of the invoice and it varies by provider and by your customer. The provider sets it, and we will show you the details before you commit.
Is factoring a loan?
It is generally structured as a sale of receivables rather than a loan, but the cost and obligations still matter. Read the agreement carefully and ask questions.
See what options fit your business
Tell us about your business once. We will match you with funding partners that fit, and we will tell you plainly if it is not a fit yet. No cost to submit a request.
Request a match →King Tide Funding is a commercial financing referral service, not a lender. We do not make credit decisions, set rates or terms, or hold or move your funds. Independent funding providers make all approval, pricing and funding decisions, and funding is never guaranteed. This page is general information, not legal, tax or financial advice. Talk to your attorney or CPA about your situation.