FOUR WAYS TO FUND AN UNPAID INVOICE.
Four products get sold to contractors waiting on money, and they are far from equal. A bank line of credit is borrowed money secured by the business. It costs 8 to 12 percent annualized. Invoice financing borrows against specific invoices, and you still do the collecting. Factoring sells the invoice outright. A third party then contacts your general contractor's accounting department, and that changes what the customer thinks about your business. A merchant cash advance is the most expensive money a contractor can take, at 40 to 80 percent annualized. You repay it by a daily debit that clears your account before payroll does. The cheapest option is off the list. Collect what you're already owed.
The problem is the order you compare them in. You have payroll on Friday and a 60 day receivable. On Wednesday afternoon you compare products by which one funds fastest. You don't look at the cost per dollar borrowed, who ends up talking to your customer, or what happens on day 40 of a daily debit. So you choose on speed, and your margin pays for it every month the arrangement lasts.
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WHAT IT MEANS.
Receivable financing is any arrangement that turns an unpaid construction invoice into cash before the customer pays it. A subcontractor gets offered four forms: a bank line of credit, invoice financing, invoice factoring and a merchant cash advance.
Borrowing to buy an asset is different from borrowing to cover a shortfall. Financing a machine spreads the cost of something that earns for years. A line of credit that covers a known billing cycle does the same kind of work. Borrowing to cover a shortfall pays for a hole the business will have again next month. That's why the second advance is always easier to sign than the first. Ask one question. Is the money buying something, or is it filling a hole that something else made?
Compare cost as an annual rate, or you can't compare it at all. A fee quoted as a percentage of an invoice only becomes an interest rate when you know how long the money is out. Products priced in factors and daily debits are hard to convert on purpose. Convert them anyway. Once every option is an annual percentage, most of these conversations end in about four minutes.
HOW THE WRONG ONE GETS CHOSEN.
The products get compared on speed alone
A bank asks for financial statements and takes weeks. An advance wires funds the same day. When the deadline is Friday, the fast one wins every time. The price never gets compared, because a factor is hard to read as a rate. A 1.4 factor on $100,000 is $40,000 of fees. It's $40,000 whether you repay the advance in four months or in six.
A daily debit takes control of the bank account
You draw on a line of credit when you decide and repay it when you decide, inside the terms. A merchant cash advance pulls from your account every business day, ahead of everybody else. Payroll, material and rent all wait behind it. The debit itself makes the next shortfall, and that's how one advance becomes a second one.
Factoring introduces a third party to your customer
When you sell an invoice, the buyer usually collects it. Now your general contractor's accounting department is dealing with a finance company about your money. Some GCs take no notice. Some read it as a warning sign, and you don't get to choose which. That cost has no number on it, and it can outlast the financing by years.
WHAT IT LOOKS LIKE IN DOLLARS.
A merchant cash advance costs 40 to 80 percent annualized. A bank line of credit for the same business costs 8 to 12 percent. A $100,000 advance at a 1.4 factor costs $40,000 in fees. You repay it over four to six months by daily ACH, and $800 to $2,000 leaves your account every business day while it lasts. Those are the same borrowed dollars at several times the price, and the advance collects daily where a bank line collects monthly.
Say an invoice financing arrangement charges 3 percent to advance an invoice for 30 days. That's 3 percent for one month. Use it all year and it's roughly 36 percent annualized, before any extra charge for invoices that go past 30 days. Most construction receivables do go past 30 days. Do the same math on whatever you're quoted before you sign anything. A fee only becomes a rate when you divide it by the time the money is out.
A $3.4M civil subcontractor had four stacked merchant cash advances. They got out without another product. Collections went first, on $245,000 of overdue receivables. Then job costing was rebuilt. Then overhead was recalculated and cut from 32 percent to 15 percent. The advances were paid off in order of effective rate, with the cash the first three steps produced. Gross profit went from 5 percent to 33 percent without raising a bid. The last advance cleared about 12 weeks from the first call.
RESEARCH FROM OTHER SOURCES.
These figures come from another company's survey. None of them come from SPM's clients. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found 28 percent of subcontractors use early pay programs, and only 13 percent of general contractors with less than $100M in revenue offer one.
Source: Billd, 2026 National Subcontractor Market Report, page 4 (survey of 623 respondents, published May 13, 2026).
Billd's 2026 National Subcontractor Market Report found more than half of subcontractors said their bank line of credit covers less than 10 percent of their annual revenue.
Source: Billd, 2026 National Subcontractor Market Report, page 8 (survey of 623 respondents, published May 13, 2026).
THE ORDER THAT COSTS THE LEAST.
Every invoice over 30 days gets a call every week, in order of which one funds which obligation. This is first because it costs nothing, needs nobody's approval and produces cash from work you've already done. If you're looking at a financing product while you hold an aged receivables report, you're looking at paying interest on money you're already owed.
Pay applications go out on the first day the contract allows. Mobilization goes on its own line. Stored material gets billed where the contract permits it. You don't need a lender for any of that, and the job earns the same. The money reaches you sooner, and that's the problem you wanted the financing to solve.
If you do need to borrow, the cheapest way is a bank line. Banks decline contractors they can't read. So you need monthly financials on a close date, a WIP schedule that ties to them, and a 13 week forecast that proves you know your own next quarter. That package is what moves the price from 40 percent to 12. Your business needs the same package anyway.
Advances get paid off in order of what each one really costs. The money comes from collections, and you take no new advance or new borrowing while the payoff is in progress. Consolidating them into another expensive product only moves the problem. The way out is math and a calendar, and the order counts for more than the size of any single payment.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. We don't bill by the hour, and we don't do payroll. The one-time onboarding fee is in the table.
Built for subs doing $1M to $12M. Above $12.5M we quote.
| Last 12 months revenue | Core | Strategic | Platinum | One-time onboarding |
|---|---|---|---|---|
| Under $1M | $1,900 | $3,100 | $3,300 | $2,500 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $4,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $6,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $7,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $9,000 |
| Above $12.5M | Quoted | Quoted | Quoted | Quoted |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers, and it moves with your revenue band. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Just want the setup? Onboarding only is the same onboarding work with no monthly service after it, one time, at the onboarding fee plus $2,000. Start a monthly engagement later and $2,000 counts toward it. It starts at $4,500, and the price for every band is on the pricing page.
The three tier columns are the whole price. Which one fits depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
- Online software only: QuickBooks, Sage, Viewpoint and similar. No VPN or hosted desktop.
- Not in any tier: payroll, pay applications, collections on receivables.
- Pricing valid through 2027.
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