Running a company that builds cellular phone towers can be both very profitable and very demanding. One advantage of working for wireless carriers or tower leasing companies is that they tend to be solid payers. However, they also tend to be slow payers taking 30 to 60 days to pay an invoice. This can be a challenge for tower construction companies that need to pay for staff and supplies as the expenses become due. This creates a situation where you have fast expenses coupled with slow income which can lead to problems.

There are three ways to cope with this problem. One, you can juggle supplier payments until your customers pay. Two, you can dip into your cash reserves (if you have them) to handle any payments.  Or three, you can use a form of financing like construction factoring to help fix your cash flow problem.

Factoring solves this problem using a simple solution a factoring company advances cash for your slow paying invoices and then settles the transaction once your end customer pays. This provides your company with the predictable cash flow it needs to operate and grow. Most factoring transactions are structured as two advances against your invoice. The first advance averages 70% to 80% of the invoice and is provided as soon as the work (or phase) is completed.  The second advance, which is remaining 20% to 30% (less fees), is funded once the end customer pays the invoice in full.

One of the advantages of invoice factoring is that it’s easier to get than conventional financing. Since factoring companies consider your invoices to be very important collateral it’s important that you work with credit worthy companies (which most wireless carriers and tower leasing companies are). Also, it’s important that your company be free of legal or tax problems.

Another advantage of invoice factoring is it’s flexibility. The factoring line is usually coupled to your sales. This means that if managed correctly, it can increase as your sales increase. This makes factoring an ideal solution for small companies that have substantial growth potential but are hampered by tight cash flow.

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