I have No Money Left to Run My Business…What should I do?

I just landed our largest construction project ever and I have no idea how to finance the project.?

Obvious options are to try to obtain financing from a commercial bank. This may be the most economical option and the one I would recommend assuming you have good credit and the bank will lend you the money. Of course, you will need to submit a series of financial documents including tax returns, current financial statements as well as your personal financial statements,

Better the obtaining financing from a bank would be to ask your customer for a large deposit and progress payments along the way. While this sounds great in theory many customers will refuse to tender large down payments and timely progress payments.

In the event, you cannot obtain bank or customer financing I would suggest you look into factoring your invoices.  There is  a solution known as “Spot Factoring”.  This is also known as Single Invoice Factoring. The spot factoring program allows you to decide which invoices you want to finance instead of being forced to finance every invoice.

The spot factoring process works as follows:

1) Your company completes an order and bills the customer

2) A copy of the invoice is sent to the factor

3) The factor reviews and verifies the invoice and completes a credit check on the debtor

4) A portion of the invoice (usually 70-90%) is advanced

5) The balance is held as a reserve — the factoring company takes a factoring fee from the reserve

6) Once the customer pays on the invoice, the factoring company will release the remainder of the reserve


XYZ Construction has a $100,000 invoice from his Customer ABC Corporation

XYZ Construction presents the $100,000 invoice to the Factor.

The Factor deposits $70,000 into XYX bank Account.

ABC Corporation pays the Factor $100,000.

Factor deposits $27,000 into XYZ Constructions Bank Account and keeps 3% of the Invoice $3,000 as a financing fee.

This assumes that the invoice is paid by Customer ABC within 30 days.

In the event that the invoice is paid within 40 days the Factor would charge and additional one percent $1,000

Regardless of type, accurate and current financial reporting is a must.

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