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Aug
31
2011

Before It’s Too Late

Posted by in Contractor Factoring

Challenges and opportunities continue to face those of us working in the Construction Contractor Accounts Receivable Factoring Space: Challenges because of the unprecedented uncertainty in the marketplace and Opportunities because the largest single problem facing contractors today, in addition to the bidding process, is their lack of access to adequate working capital, opening the door for our services.

Contractors are understandably cautious today about bringing on new work, even though they have the capacity.  The contractor or subcontractor must underwrite the General Contractors and Project Owners who would like to hire them to make sure both have the ability to pay them for the work they provide. This is a time consuming and often expensive task that most small to mid-size contractors are ill equipped to perform. RMP Capital provides that service to ensure that both our clients’ and RMP Capital’s interests are protected.

It is common knowledge that one of the most detrimental aspects of the construction industry is the bidding process. At a time when many contractors are bidding considerably below cost in order to get work, contractors are encourage to negotiate contracts with GC’s and owners if at all possible, building in incentives for themselves and whomever they are contracted with if they bring their project in early and/or below cost.

Properly capitalized contractors are able to take advantage of opportunities when they present themselves, rather than scrambling to qualify for financing after they are awarded a contract or passing on opportunities because they do not have adequate capitalization. Contractors should be encouraged to establish a factoring facility while they are negotiating for projects. It is usually true that, if a contractor is applying for a factoring facility or a bonding program when they need it, it’s usually too late!!

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