October 2011: Finance



How the masonry industry can benefit from factoring

Banks don’t seem to have any money to lend right now – or at least none they want to – and equity markets aren’t a great value proposition for many companies with investors skeptical about, well, everything.

U.S. Bancorp recently commissioned a survey of 1,004 companies, nationwide, with annual revenue of $10 million or less. The results showed slightly less than one-third of those surveyed said their bank provides everything they need regarding financing and other business services.

Yet, business needs to go on. Companies still need to buy goods, meet payroll, cover seasonal adjustments and even seize market opportunities. So what are they to do?

More companies are turning to factoring, an alternative to bank lending that provides businesses with capital when needed on a flexible formula basis, proportional to sales. The factoring “line” grows as the sales to credit worthy customers increase, giving clients an opportunity to capitalize on market opportunities.

Let’s say a business has $100,000 in accounts receivable expected and, depending on the business, it might be weeks, months or longer before it’s in hand. Yet, they have an immediate need to cover an expense, buy new inventory or tackle a wide variety of new business prospects.

Traditionally, they might have gone to a lender with whom they have a relationship and gotten a loan secured by the company’s assets. Those loans are much harder to come by these days, due to tighter lending policies. If they can be obtained, they have lower limits and much stricter covenants.

As a mason, have you ever been in a situation in which you were waiting on a check from a large job, and needed that check to cover payroll? Even the healthiest of operations sometimes find themselves in this situation and need lines of credit to help smooth out the cash flow bumps. That was the case of a successful, self-made small- to mid-sized mason based in San Antonio, Texas. This mason often is hired by school districts to perform stucco work, lay concrete and brick, cut stone for buildings, and complete a variety of other construction-related projects.

Because of delays in state and federal funding, school districts often are late to pay out on construction contracts. By the time the contractor submits the payment application for the completed work, it can take up to 60 days to receive the full payment. Depending on the size of the job, the client has payroll to meet for about 10 to 15 employees at a deadline well before 60 days after project completion.
Liquid Capital was able to provide the working capital this masonry client needed to pay his bills and payroll on time, during the waiting period between project completion and receipt of payment.

Factoring services become increasingly important as masons take on more projects for school districts and other government-funded work, which can be late on payouts. Businesses that experience fast growth also can utilize factoring to keep up with accounts receivable. Factoring helps businesses maintain good credit ratings, by allowing them to pay their bills on time.

Factors have fought a stereotype for years, one that assumes they are a last resort or the business equivalent of payday lending. In reality, factoring is a cost-effective, flexible and responsive form of trade financing that allows clients to grow and prosper in both good and bad economies. In addition, getting money from a factor doesn’t make a company beholden to any banking covenants or the requirements of equity partners.

Factors not only provide money, but also a full outsourced credit and accounts receivable management solution. Many times, companies choose to continue to use factors for credit and collection services alone, with many businesses finding it more efficient than creating their own departments.

Each company’s cost of factoring is based on its risk, industry and market position. While critics say it’s more costly than lending, those in factoring beg to differ.

If you have a chance to grow your business and you don’t have capital available, your competitors can take your market share, or you can miss a growth opportunity and, perhaps, a payroll. If that’s the case, what is capital worth?

Ron Edinger owns Liquid Capital South Texas in San Antonio. He also is the principal of Liquid Capital Exchange Inc. He can be reached at 210-587-7267 or

Return to Table of Contents

Related Posts

  • 56
    Masonry student Tony DiBucci discusses his studies and his career path.
    Tags: masonry, work, opportunity, school, job
  • 52
    Will you accept the call to serve? You may feel like a little fish in a big pond, but you too can be a voice for the masonry industry.
    Tags: industry, masonry, time
  • 46
    In Texas, you either do it big or not at all. So when members of the Texas Masonry Council (TMC) and the University of Texas at Arlington (UTA) saw an opportunity to address a looming shortage of masonry workers in the Lone Star State, they didn’t settle for half measures.
    Tags: masonry, texas, industry
  • 39
    A lesson learned from those who dug water wells by hand years ago is that the harder you dig a hole, the deeper you will get. The deeper you get, the less the view. The less the view, the less you can observe. The less you observe, the less you…
    Tags: business, masonry, mason, work, company, job, sales, growth
  • 38
    When I first started my commercial general contracting company more than 35 years ago, I acted as both the field superintendent and project manager. After finding a potential customer who needed a project built, I estimated and bid the jobs, negotiated with the owner...
    Tags: project, projects, masonry


S26 HEPA Dust Extractor From Pullman Ermator

Ermator HEPA Dust Extractors are equipped with tested and certified HEPA filters that trap the smallest, most dangerous-to-breath dust particles and prevents them from being released in the air. A HEPA Dust Extractor not only exhausts perfectly clean air, it is far more efficient for the fast recovery of bulk dry dust, debris and other building materials found on every Construction, Abatement and Restoration job site.

Drilling and Chiseling Hammer Demonstration | CS Unitec

CS Unitec Drilling and Chiseling Hammer type 2 2414 0010 demonstration. For more information on the tools, drills and other products seen in this video, please visit:

PumpMaster | Masonry Grout Pump for Core Filling | Block Fill | Masonry Wall Grouting

The AIRPLACO PumpMaster PG-30 is shown on a jobsite in Nashville, TN with Masonry Contractor WASCO, Inc. ...