Construction Factoring Rates & How Construction Factoring Works

Construction is billed in stages against a schedule of values, so factoring follows the same rhythm. A typical cycle:

• Submit the pay application. You bill the agency, owner or prime for work completed this period.
• The payer approves it. The amount currently payable is the approved billing, less any retainage held back.
• You receive the advance. The funding partner advances a percentage of the approved, payable amount. Encore advances 80 to 90% of invoice value and, once your account is active, funds each invoice the same or next day.
• The payer remits. Payment goes to the funding partner under the arrangement set up at onboarding.
• You receive the balance. The remaining amount, less the fee, is released to you. Retainage follows later, when the payer releases it.

The numbers below are a hypothetical to show the mechanics. They are not Encore's rates or terms; your quote depends on the drivers above.

• Progress billing approved: $200,000.
• Retainage held by the payer at 10%: $20,000, so $180,000 is currently payable.
• Advance at 85% of the payable amount: $153,000, available once the invoice is funded.
• The payer remits $180,000 thirty days later. A hypothetical fee of 2.5% of the payable amount is $4,500.
• Balance released to you: $180,000 minus $153,000 minus $4,500 = $22,500.
• The $20,000 retainage is paid to you when the payer releases it at the end of the job or phase.

Federal contracting officers may withhold retainage from progress payments when it is needed to protect the government, generally not more than 10%, and it should be released when it is no longer needed (FAR 32.103, FAR 52.232-5). On the government side, progress payments are due 14 days after a proper payment request and final payment 30 days after acceptance (FAR 52.232-27).

Because retainage isn't payable yet, it usually isn't part of the up-front advance. Plan your cash around the retainage you have outstanding across all jobs, not just this month's billings.

Federal construction contracts over $150,000 require Miller Act performance and payment bonds (40 U.S.C. 3131 to 3134, FAR 28.102-1). The surety that issues them has an interest in the contract payments, which is why an assignment of claims on a federal contract is noticed to the surety as well as the contracting officer and disbursing office (FAR 32.802).

On private and subcontract work, watch for joint check arrangements, lien waiver requirements and anti-assignment clauses. A construction factoring partner should coordinate surety consent and payment instructions up front, so nobody is surprised when the first check is redirected. See the Assignment of Claims Act guide for the federal process.

• Bill cleanly and on time. Rejected pay applications extend the time the advance is outstanding.
• Fund the strongest payers. Federal agencies and established primes typically price best.
• Keep volume steady. Regular billings across jobs usually earn better terms than one-off invoices.
• Settle surety and lender consents early. Clean paperwork speeds onboarding and funding.
• Compare all-in costs. Ask every provider for the total cost on the same invoice at 30, 60 and 90 days.

Use the factoring rate calculator to model the advance, reserve and fee on any invoice. For a real quote, apply: Encore responds within 24 hours, and most clients onboard in two to three weeks.

Ready to fund your progress billings? See construction factoring for contractors and subcontractors for how Encore structures it.