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Construction finance hub

Learn about the variety of loan and financing options available to contractors, suppliers and other construction businesses.

Construction finance education

Intro to financial management

Financing for contractors

Construction accounting basics


Days Sales Outstanding
Days Sales Outstanding (DSO) measures the average number of days it takes your company to collect after invoicing.

How to calculate your DSO
Collection Effectiveness Index
The collection effectiveness index (CEI) is a measure that shows how successful you are in collecting both your current and past due accounts receivable.

How to calculate Collection Effectiveness Index
Accounts Receivable Turnover
Accounts Receivable Turnover (ART) lets companies know how quickly they are collecting their accounts receivable and how many days their customers take to pay them, on average.

How to calculate Accounts Receivable Turnover
Average Days Delinquent
Average Days Delinquent (ADD) lets companies know the average number of days that late payments take to get collected.

How to calculate Average Days Delinquent

Construction finance options

Retained Earnings

Retained earnings refers to the profit that a construction business is able to put in business savings after each successful project.

  • Pros: Using savings has very little cost to the contractor. It’s your own money – you don’t have to pay interest or other fees to use it.
  • Cons: It requires significant time, discipline, and efficient business management to build up enough business savings to draw from.

Line of Credit

A line of credit is a limited pool of money that your construction business can draw from as you need it. A line of credit can either be secured or unsecured.

  • Pros: Provides cash flow as you need it, so you only pay interest on the amount you use.
  • Cons: Typically carries a higher interest rate than a bank loan; requires good credit score and financial statements.

Invoice Factoring

Invoice factoring is a process in which you sell outstanding invoices or accounts receivable. Factoring is only available for invoices after they are issued but before they are due.

  • Pros: No credit score required; no monthly payments; factoring company can manage your accounts receivable and collections processes
  • Cons: Can affect communication with your customers, if they are not familiar with the process.

Debt Issuance

Debt issuance is typically only available to very large companies with several years of audited financial statements. To issue debt, the company will work with an investment bank to issue bonds or debt to investors.

Equity Offering

An equity offering is an option only for larger companies with a long history of good financial management. In an equity offering, the company’s owner sells stakes in their company to investors in either the private or public markets