How Wise Factoring helped a growing construction business break free from a facility it had outgrown, clear expensive short-term debt, and move to a funding partner built for where it was heading next.
The Challenge: A Facility That Once Worked, But Wasn’t Working Anymore
This fast-growing London-based construction company had a construction factoring facility in place with a specialist lender, and for a while it did exactly what it needed to do.
The business supplied specialist services on construction sites, work that comes with all the usual industry timing problems: wages and materials go out long before certified applications for payment come back in. The facility was put in place to bridge that gap, and it supported the company through an important stage of its growth.
But growth doesn’t stand still, and neither does the funding a business needs to sustain it.
As the company won more work and its debtor book grew, it began repeatedly hitting the ceiling of what the existing facility could provide. The lender wasn’t prepared to move any further. Not because anything had gone wrong, but because, in its view, the business had reached the limit of what it was willing to fund.
There was a second problem sitting underneath that ceiling, one that wasn’t immediately obvious. To keep projects moving while the facility was maxed out, the directors had taken on some short-term borrowing. It plugged the immediate gap, but every month it chipped away at the working capital the business needed to actually grow.
The company wasn’t short of work. It was short of a facility that matched the size of the business it had become.
A Fresh Pair of Eyes
Our first step wasn’t to go shopping for a bigger limit.
It was to properly understand what was really constraining the business, and that meant looking past the headline facility figure entirely.
We reviewed:
- The structure of the existing construction factoring facility
- How the company’s applications for payment and certified invoices actually moved through the debtor book
- The short-term borrowing sitting alongside the facility, and what it was costing every month
- Where the true funding requirement sat once that borrowing was accounted for
It quickly became clear that simply finding a lender willing to match or slightly beat the existing limit wouldn’t solve the underlying problem. The business would hit the same ceiling again within a matter of months, just with a different lender’s name on the paperwork.
Structuring More Than Just a Bigger Facility
Rather than presenting this to the market as “this business needs a bigger limit,” we built the case for something more specific.
We took the proposal to a specialist construction factoring lender and made the wider commercial argument directly: that a modest increase in facility, used to clear the expensive short-term borrowing, would immediately strengthen the company’s monthly cash flow, not just shift the ceiling a little further away.
Construction debt isn’t as simple as a standard invoice. Applications for payment, certification, retentions, staged valuations and contract variations all affect when and how a construction business actually gets paid. Any lender considering the case needed to understand not just what the debtor book was worth, but how the money actually flowed through it.
The lender we approached had the appetite and the sector knowledge to look at the whole picture, not just the facility limit in isolation.
The Underwriting Reality: Far From a Rubber Stamp
Getting to a positive decision wasn’t simply a case of presenting the opportunity and waiting for a yes.
Once underwriting got underway, a number of genuine issues surfaced that had to be worked through one by one:
- A significant concentration of aged debt sitting on the ledger, which needed explaining, and in places reconciling, before the underwriter could rely on it
- Supporting documentation and audit trails on a handful of live contracts that weren’t yet complete enough to satisfy the lender’s compliance checks, including bespoke contract terms and framework details that needed chasing down and properly evidencing
- Management accounts that, on closer review, contained inconsistencies between reporting periods, requiring reconciliation before the underwriter could form a clear picture of the balance sheet
- Existing short-term borrowing already secured against the business, which added complexity to the personal guarantee position being offered
- Limited equity sitting behind the directors’ personal guarantees, meaning the strength and accuracy of the financial information mattered more than it otherwise might have
None of these issues were fatal on their own. Together, though, they meant the underwriter needed real reassurance before she could get comfortable, and that reassurance had to be built patiently, point by point, rather than glossed over.
Working Through the Detail
Rather than leaving the client to field a long list of underwriting queries alone, we worked through each point systematically:
- Chasing down and organising the missing contract documentation so every application on the ledger could be properly evidenced
- Working with the client to reconcile the aged debtor and creditor positions and explain the larger balances the underwriter had flagged
- Helping tidy up the management accounts so the numbers told a consistent story from one reporting period to the next
- Keeping a constant, direct dialogue open with the underwriter throughout, so no query sat unanswered long enough to put the deal at risk
It wasn’t a quick process. But addressing the concerns properly, rather than papering over them, was what ultimately got the underwriter comfortable enough to support the move.
Managing the Transfer
Switching an ordinary invoice finance facility takes coordination. Switching a specialist construction factoring facility, without disrupting live contracts or cash flow, takes a great deal more.
Wise Factoring managed the transfer from start to finish, staying in the middle of the process throughout and coordinating between the client and the incoming lender at every stage, keeping information moving and queries answered so the business could keep trading normally while the transfer took place behind the scenes.
The Outcome
The company moved onto a new construction factoring facility, genuinely sized for the business it had become rather than the one it started with.
At the same time, it cleared the short-term borrowing that had been quietly working against its cash flow every month. The combined effect gave the business:
- Increased funding headroom
- Removal of costly short-term debt repayments
- Immediate improvement in monthly working capital
- A lender with the appetite to support its next stage of growth
- The confidence to take on additional contracts without hitting the same ceiling again
Key Takeaway
A lender saying no to a bigger facility doesn’t mean the market has said no. It usually just means that particular lender’s appetite has been reached.
It’s also worth remembering that reaching a facility limit is rarely the whole story. If a business is carrying short-term borrowing to plug the gaps around it, the real fix often isn’t simply a bigger facility, it’s a properly restructured one.
And even a strong underlying business can face a genuinely difficult underwriting process. Aged debt, gaps in documentation and messy management accounts don’t disappear just because a business is growing. They have to be worked through, honestly and in detail, before a lender can say yes with confidence.
At Wise Factoring, we don’t just compare headline limits or submit an application and hope. We look at the full funding picture, get into the detail underwriters actually care about, and build a case that gives lenders genuine confidence to say yes to something better.
Is Your Construction Factoring Facility Holding You Back?
If your business is regularly reaching its facility limit, relying on short-term borrowing to bridge the gaps, or turning down work because of cash flow constraints, it’s worth having your facility independently reviewed.
We’ll explain your options, compare the market and help you decide whether staying put or moving to a new provider is the right call for your business.
Frequently Asked Questions
Can I switch construction factoring providers? Yes. Businesses move from one construction factoring provider to another regularly. It needs to be planned properly, since construction debt is more complex than standard invoicing, but with the right support the transfer can be managed with minimal disruption to cash flow.
Will a new lender pay off my short-term debt as part of the switch? In some cases, yes. If a modest increase in the new facility can be used to clear expensive short-term borrowing, it often strengthens the overall proposition, both for the business and for the lender assessing the case.
Why would a lender refuse to increase my facility? Usually because the business has reached that particular lender’s internal risk or credit appetite, not because the funding requirement itself is unreasonable. Other lenders in the market may have considerably more room to work with.
Is switching construction factoring providers more complicated than switching standard invoice finance? Yes. Construction debt often involves applications for payment, certification, retentions and staged valuations, all of which a new lender needs to understand before agreeing terms. It takes more careful handling than moving a standard factoring facility.
How do I know if my construction factoring facility needs reviewing? If you’re regularly hitting your limit, relying on short-term borrowing to bridge gaps, turning down work because of cash flow, or your current lender won’t move on your limit, it’s worth having the facility independently reviewed.
The Wise Factoring Difference
We don’t represent one lender, we represent you.
By comparing the UK’s leading construction factoring providers, we help growing construction businesses secure a funding partner that’s the right fit both now and as they continue to grow.
