Business finance for construction firms

The cash-flow gap

Construction firms carry cost before they get paid. Labour, materials and plant hire all fall due while the client works to a stage-payment schedule and, often, a retention that isn't released until months after practical completion. That timing gap — money out now, money in later — is the defining funding challenge in the sector, and it widens every time a project scales up.

Where funding is used

• Materials up front. Buying steel, timber, aggregates or fit-out materials before the stage payment lands.
• Payroll and subcontractors. Meeting weekly and monthly labour costs across concurrent sites.
• Plant and equipment. Financing or hiring the machinery a job needs without draining working capital.
• Retention bridge. Covering the gap while retentions sit unpaid after completion.

Facilities that tend to fit

Short-term working capital suits the stage-payment rhythm: draw when costs land, repay when the client pays. Companies with large unpaid applications for payment sometimes pair this with invoice finance to release cash tied up in certified work. Because Credicorp lends to the company with no personal guarantee on its core facilities, directors can fund a project without signing personal assets away against a single contract.

What to weigh before borrowing

Match the facility to the contract: a short project needs short finance, and drawing more than the stage schedule can service just adds cost. Watch retention timing, keep an eye on concurrent-site exposure, and make sure the repayment plan tracks the client's actual payment dates rather than the optimistic ones.