Construction Factoring: Turn Contracts Into Cash Flow
Progress invoices are approved. The GC pays in 60 days. Your crew, materials, and subs are due now. IFXI advances 70%–85% on approved construction invoices — including progress billing and AIA pay applications.
- ✓Advances on approved progress invoices and AIA pay applications — retainage excluded from advance calculation.
- ✓Conditional lien waiver coordination handled as part of the standard factoring process at no extra charge.
- ✓Approval based on GC or owner creditworthiness — not your bond capacity or personal credit score.
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Executive Summary: Construction Factoring
What it is: Construction factoring is a B2B financing arrangement where contractors and subcontractors sell approved progress invoices, pay applications, or AIA billing documents to IFXI in exchange for an immediate advance. It is not a loan and does not add debt to your balance sheet.
The numbers: Advance rate: 70%–85% on approved construction invoices · Funding speed: 24–48 hours from approval · Factoring fee: 1%–3% per period · Progress billing and AIA pay apps accepted · Estimated minimum monthly volume: ~$50,000.
Key constraints: Retainage amounts are excluded from advance calculations. Disputed invoices, invoices without completed lien waiver documentation, and receivables with an existing UCC lien from another lender are not eligible. Joint check arrangements require prior disclosure at application.
The Fast Facts on Construction Factoring
How fast is construction invoice factoring?
The short answer is 24–48 hours from a complete application for first-time funding. Ongoing pay application submissions from established accounts fund within 24 hours of approval. Progress billing and AIA pay apps require lien waiver coordination as part of the standard submission.
What does construction factoring cost?
Construction factoring fees run 1%–3% of invoice face value per period. Rates depend on GC or owner creditworthiness, project type, and payment terms. Government and public works projects may require additional documentation but often carry strong debtor credit quality.
Who qualifies for construction invoice factoring?
Any B2B contractor or subcontractor with approved progress invoices or pay applications qualifies — including electrical, plumbing, HVAC, framing, and specialty trade subs. Primary disqualifiers: unapproved invoices, disputed pay apps, retainage-only receivables, and accounts with existing UCC liens.
Stop Letting Cash Flow Hold You Back
GC Payment Cycles Running 60–90 Days on Active Jobs
You've submitted a progress invoice for completed work. The GC runs on 60-day pay cycles and retainage holdbacks are eating another 5%–10% off the top. Construction factoring converts approved pay applications into cash before the GC's check is even cut.
Materials & Labor Can't Wait for Draw Schedules
Lumber, concrete, electrical material, and subcontractor labor are due on 30-day or shorter terms. When your GC's draw schedule runs 90 days, the gap between outgoing costs and incoming progress payments creates serious cash flow exposure on every active job.
Banks Won't Lend Against Progress Billing
Traditional lenders treat construction receivables as too complex — percentage-of-completion accounting, retainage holdbacks, and lien rights make progress billing hard to collateralize. IFXI specializes in construction AR and structures advances around real, approved invoice data.
Get Funded in 3 Simple Steps
Submit Your Pay Applications
Upload approved progress invoices, AIA G702/G703 billing documents, and conditional lien waiver forms through the IFXI portal. Free setup, under 10 minutes. Retainage amounts are excluded from the advance calculation at submission.
We Verify & Advance Funds
IFXI confirms invoice approval from the GC or owner, reviews debtor credit quality, coordinates lien waiver documentation, and processes the Notice of Assignment. 70%–85% of the approved invoice advances via ACH or wire within 24–48 hours.
Receive Your Reserve Rebate
The GC or owner remits payment directly to IFXI. After payment clears, the reserve is released to your account minus the factoring fee. Retainage released by the GC at job completion is processed separately.
What to Expect: Your Funding Timeline
| Stage | Typical Timeframe |
|---|---|
| Free application submitted | Day 0 — Under 10 minutes |
| Initial review & pre-approval | Day 0–1 — Same day to 24 hours |
| Account setup & UCC-1 filing | Day 1–2 |
| First pay application funded | Day 2–3 after approval |
| Ongoing invoice submissions | 24-hour funding for active accounts |
| Reserve rebate released | After GC/owner payment clears |
Important Notes
- ✓Progress invoices must be approved by the GC or owner before submission — unapproved pay applications are not eligible.
- ✓Retainage amounts are excluded from the advance calculation. Retainage release is handled separately at job completion.
- ✓Conditional lien waiver documentation is required as part of standard construction factoring — IFXI coordinates this at setup.
- ✓Joint check arrangements with material suppliers must be disclosed at application to avoid funding delays.
The Right Time to Start Construction Factoring
You're Running Multiple Active Jobs With Overlapping Cash Needs
Overlapping project draw schedules create compounding cash flow gaps. Construction factoring converts each approved pay application into working capital so multiple active jobs do not compete for the same pool of available cash.
A Large Material Purchase Is Due Before the Next Draw
Structural steel, HVAC equipment, and electrical panels often require full payment 30 to 60 days before a draw will cover them. Construction factoring bridges that material cost gap without the interest expense of a short-term loan.
Your GC Is Creditworthy but Notoriously Slow to Pay
Some of the best general contractor relationships come with 90-day payment cycles. Construction factoring lets you accept those contracts without absorbing the cash flow penalty of slow progress payments and delayed draw releases.
The IFXI Difference
No Long-Term Contracts
Factor as many or as few invoices as your business needs. No minimum-term agreements, no multi-year commitments. You stay because the service works — not because you're locked in.
Transparent, Flat Fees
Your fee is disclosed upfront — no origination charges, no monthly minimums buried in fine print, no surprise deductions on reserve release. 1%–3% is the complete cost of capital.
Dedicated US-Based Account Manager
Every IFXI client is assigned a single point of contact who knows your industry, your billing cycle, and your customers. You're not navigating a call queue — you're working with someone who knows your file.
Transparent Costs for Construction Factoring
| What to Expect in Costs | What Affects the Rate | National vs. Local Pricing |
|---|---|---|
| Advance rate: 70%–85% of approved progress invoice value advanced upfront. Factoring fee: 1%–3% of invoice value, assessed when collected. Reserve: Remaining 15%–30% held until GC/owner payment, then released minus fee. | GC/owner creditworthiness: Public entities and large GCs earn lower rates. Payment terms: Net-30 pay apps cost less than net-90 draw schedules. Project type: Government projects add documentation but often carry strong debtor credit. Joint checks: Add complexity and may affect the advance rate. | National factors like IFXI have experience with AIA billing, lien waiver coordination, and construction AR across commercial, industrial, and government projects. Local factors may understand regional lien law but often lack capacity for complex multi-project portfolios. |
Construction Factoring vs. Bank Line of Credit vs. Merchant Cash Advance (MCA)
| Feature | Construction Factoring | Bank Line of Credit | Merchant Cash Advance (MCA) |
|---|---|---|---|
| Typical Approval Speed | 24–48 hours | 2–8 weeks | 1–3 days |
| Min. Credit Score Requirement | None — GC/owner-based approval | 650–700+ (owner personal) | Estimated 500+ (owner personal) |
| Maximum Advance Rate | 70%–85% on approved pay apps | Variable (% of collateral/assets) | Estimated 70%–80% of monthly revenue |
| Debt Added to Balance Sheet? | No — receivable sale, not a loan | Yes — revolving debt liability | Yes — advance recorded as a liability |
| Hidden Fees / Covenants | None — 1%–3% flat fee disclosed upfront | Origination, maintenance, annual review, covenants | Factor rates, daily ACH debits, prepayment penalties (Variable/Estimated) |
Real Funding Scenarios
Who We Partner With
Specialty Subcontractors (Electrical, Plumbing, HVAC, Framing)
Trade subcontractors running active commercial and industrial projects who submit regular pay applications to GCs with 60–90 day payment cycles and retainage holdbacks on every contract.
General Contractors Managing Subcontractor Payables
GCs who need to pay subs faster than their owner's draw schedule allows use construction factoring to maintain trade relationships and keep job schedules on track without cash flow disruption.
Commercial Renovation & Tenant Improvement Contractors
Contractors running multiple commercial TI projects simultaneously who face overlapping progress payment timelines and material procurement costs across active projects.
Providing Working Capital Coast to Coast
Texas, California, Florida, New York, Illinois, Georgia, Ohio, Pennsylvania, North Carolina, Michigan, Arizona, Washington, Tennessee, Colorado, Indiana, Nevada, Oregon, Minnesota, Wisconsin, Missouri, Maryland, Virginia, ...and nationwide across all 50 states.
Frequently Asked Questions
Construction factoring is defined as a financing arrangement where contractors and subcontractors sell approved progress invoices or pay applications to IFXI in exchange for an immediate advance. IFXI advances 70%–85% of the approved invoice value, coordinates lien waiver documentation, and releases the reserve minus the factoring fee once the GC or owner pays. It is not a loan.
The short answer is that retainage amounts are excluded from the factoring advance calculation. IFXI advances against the progress billing amount only — the retained percentage is handled separately when the GC releases retainage at job completion.
A conditional lien waiver is a document that releases your lien rights against a project upon payment of a specific invoice amount. IFXI requires conditional lien waiver documentation as part of construction factoring so the GC can make payment without lien exposure. IFXI coordinates this process as part of setup.
Yes — construction factoring is available for subcontractors, specialty trades, and general contractors alike. Approval is based on the creditworthiness of the GC or project owner paying the invoice, not the subcontractor’s bond capacity or credit history.
The short answer is that approved AIA pay applications, progress billing invoices, and completed milestone invoices from B2B construction contracts qualify. Retainage-only receivables, unapproved pay applications, and disputed invoices do not qualify for advance.
Ready to unlock your cash flow?
Fill out the instant quote form at the top of the page, or call IFXI directly. No obligation. No long-term contracts.