Our guide showcases the vast array of construction financing solutions available to struggling firms operating with this increasingly competitive industry, along with dedicated scenarios where invoice finance, business loans, equipment financing and more can help your business thrive throughout this fiscal year.
1. Place competitive bids for upcoming projects
Recent months have seen a wealth of new domestic work come onto the market for vying construction businesses. The UK government, for instance, has announced its ambitious plan to build 300,000 new homes a year by the mid-2020s – as outlined in our 2017 Autumn Budget guide last November – and outsourcing giant Carillion’s demise has left many industry analysts curious as to whether any of its 57 ongoing construction projects will now be open to bidding.
However, if a business lacks the funds to both bid for new work and pay staff, for example due to late payments for past or ongoing projects, then tendering further projects would represent a severe risk to their cashflow and thus seem unfeasible. One need only examine the construction industry’s Q4 2017 output figures for evidence of this cause for concern in the eyes of many businesses, with the Financial Times attributing the sector’s “most sustained fall in quarterly output for more than five years” largely to “businesses’ reluctance to commit to new projects”.
Perhaps it’s time to consider a new business model – rather than waiting 69 days (a figure which has risen from 52 in the last half-decade, according to the Guardian) for customer payments and losing the chance to bid for vital new work in the process, why not explore invoice finance? This increasingly popular cashflow solution allows businesses to access a high percentage of their invoices’ value, often within as little as 24 hours of raising them, with the additional options of confidential and credit control facilities if your construction firm desires.
2. Fund short- or long-term works once secured
For some businesses, the prospect of placing bids for these new projects mightn’t necessarily represent the main problem; the true concern might instead lie with maintaining funding for these works, whether over the course of a few months or several years. What would happen if another ongoing project encounters unforeseen issues on-site, or your contractor decides that they want further works completed before they’re willing to release payment(s)? Will this endanger your new project before it is probably underway and risk subsequent disputes?
This is where the latest addition to Touch Financial’s acclaimed range of cashflow solutions, unsecured business loans, comes into play. Through an unsecured business loan, firms can gain fast, valuation-free access to a wide range of funding amounts, with fixed or variable APRs and flexible loan terms depending on whether the monies will go toward short- or long-term projects.
If keeping your firm’s construction financing secure throughout current and potential projects poses a genuine concern at present, then be sure to visit our unsecured business loans page for further details on how we can help.
3. Access equipment financing
With each new project comes the need for a construction business to consider whether its current fleet of vehicles, machinery and other equipment are sufficient enough to fulfil a contract’s criteria, not to mention how the firm in question will fund purchasing or hiring new equipment if that’s not the case. Again, business owners often find themselves left with a paradoxical situation: making the investments required to fill equipment shortages could leave them unable to pay the staff operating them or suppliers providing related materials.
Enter asset finance, another of the cashflow solutions which you could be eligible for. Whether your business opts for a hire purchase – where a firm pays instalments of an asset’s cost then will own the asset at the end of a pre-agreed period or leasing which is where the business pays a monthly fee but will not end up owning the asset, asset finance can provide vital help to ensure that you never lack the equipment needed for future works.
4. Launch a recruitment drive
One of the most heavily reported problems faced by construction firms today is a supposed lack of skilled workers for future projects. The Royal Institute of Chartered Surveyors estimates that 60% of businesses operating in the sector faced recruitment difficulties for this reason in Q3 2017, a troubling figure in light of the increased demand noticed by the organization since Q3 2016 and the Construction Industry Trading Board’s own forecasts of Wales’ building industry needing 2,450 further construction workers in the next half-decade.
Rather than offer no solution, though, national regulator Qualifications Wales encouraged UK schools to focus more on promoting the myriad opportunities available for young people within the construction industry, finding that many further education students “were often not ready for the workplace, lacked on-site experience or an understanding of the working environment”. This in turn indicates a major opportunity for the sector to make its voice heard, encouraging youngsters to develop themselves and help fill those all-important gaps in businesses’ skillsets.
As such, rather than waiting for regulators and academic institutions to take the initiative themselves, why not invest in a marketing campaign to build awareness of apprenticeships, job opportunities and industry qualifications available for students to complete? Invoice finance or an unsecured business loan could both prove of benefit to your business in this respect, strengthening your cashflow while you invest in the necessary advertising resources or staff without the risk of late payments or funds owed to suppliers crippling your ability to do so.
Get in touch
In a sector presently as rife with late payment issues and administration dangers as with opportunities to acquire new work and overcome skills shortages, UK construction businesses must think on their feet in order to secure their cashflow and future success.
Contact Touch Financial today and one of our expert consultants will help you find the most suitable cashflow solution for your business such as invoice finance, asset finance, business loans or one of our numerous other construction financing services. You’ll find more details on how to start securing your business’ funding for current and future projects at our dedicated construction finance page here and be sure to follow our blog for regular industry updates in the coming months.