Invoice finance for construction businesses

• Cash flow challenge: Long payment terms in construction projects mean I’m waiting months for invoices to be paid, putting pressure on my ability to cover labour, materials, and overheads.

• Perfect for: Construction firms, contractors, and subcontractors that complete work in stages and need steady cash flow between milestones.

Novuna helps construction firms release funds tied up in unpaid invoices - either through our award-winning in-house service or by comparing the market to find the best fit for your project timelines.

We compare providers who understand the construction sector, help you apply, and make sure you get the right deal for your needs.

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How invoice finance works in the construction sector

Construction projects often operate on milestone payments, staged invoicing, or lengthy retention periods. This can leave businesses with a cash flow gap even when the project is progressing smoothly. With invoice finance, you can:

• Raise funds against certified applications for payment or completed work
• Access up to 90% of the invoice value within 24 hours
• Retain control of payment chasing or outsource collections depending on the facility type

By bridging this gap, invoice finance ensures you have the liquidity to pay suppliers, staff, and subcontractors on time - keeping projects on track and relationships strong.

Why cash flow is critical for construction businesses

Even profitable construction firms can struggle if cash is tied up in unpaid invoices. Key risks of poor cash flow in the sector include:

• Delays in ordering materials, leading to project slowdowns
• Difficulty paying subcontractors on time
• Risk of reputational damage if suppliers are left unpaid
• Limited ability to take on new projects while waiting for payment

Maintaining healthy cash flow is not just about keeping the lights on - it’s about securing your ability to grow, win new contracts, and negotiate better terms with suppliers.

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Types of invoice finance available to construction firms

There are two main types of invoice finance to consider:

1. Invoice factoring: The lender provides an advance and also manages credit control, collecting payments directly from your clients. This can save you time but means the client will be aware of the finance arrangement.
2. Invoice discounting: You receive the advance but continue to manage collections in-house, so the client is not aware of the arrangement. This offers more discretion but requires a solid credit control process.

Choosing the right facility

When comparing your options, consider:

• Whether you need confidentiality with your clients
• The percentage advance available and associated fees
• Any minimum contract terms or turnover requirements
• Experience with construction industry payment structures

A provider experienced in construction finance will understand the nuances of retention payments, stage invoicing, and contractual payment terms - all of which can impact when and how you receive funding.