Construction and Skilled Trades
The construction industry operates on long payment cycles that are largely outside your control. General contractors pay subcontractors when they get paid by the owner. Owners pay when the lender releases funds. Retainage holds back a percentage of every invoice for months — sometimes until the entire project is complete. The result is a chain of delayed payments that puts the greatest financial pressure on the companies doing the actual work.
Whether you're a plumbing contractor, an electrical subcontractor, an HVAC company, a concrete crew, or a general trades firm, your costs don't wait for the payment chain to catch up. Materials need to be purchased for the next job. Crews need to be paid every week. Equipment leases and insurance premiums come due on a fixed schedule. Factoring gives construction companies a way to access capital they've already earned rather than waiting on the payment chain to work its way down to you.
Why Construction Factoring Requires Specialized Expertise
Construction factoring is among the most complex and paperwork-intensive forms of receivables financing. Unlike a straightforward product invoice where goods are shipped and a bill is sent, construction billing involves progress invoices tied to percentage of completion, time-and-materials documentation, change orders, retainage provisions, lien waivers, pay applications, inspection approvals, and proof of materials delivery. Every invoice carries its own set of supporting documentation, and each project has its own contract terms, payment structures, and approval workflows.
This complexity is why many general factoring companies either avoid construction receivables entirely or price them at a steep premium. They lack the experience to evaluate the paperwork, assess the risks, and understand the payment dynamics that are standard in this industry.
Hexagon's leadership spent over 30 years inside the banking system, including extensive involvement in construction lending. That background means we understand how construction projects are structured, how money flows from lender to owner to general contractor to subcontractor, and where the risks and bottlenecks live at every stage. We read pay applications, evaluate contract terms, and assess project risk with the same discipline we applied in a banking environment — because that's where we learned it.
How Factoring Works for Construction Companies
You complete a phase of work and submit a progress invoice or completed-work invoice to the general contractor or project owner. You then submit that same invoice to Hexagon along with supporting documentation — which may include a signed pay application, lien waiver, inspection approval, change order documentation, or proof of materials delivery.
We review the documentation, verify the receivable, and advance 70–85% of the eligible invoice amount directly to your account, typically within 24 to 48 hours. Advance rates in construction tend to be lower than in other industries, and there's a good reason for that — construction receivables carry a higher risk of disputes, change orders, backcharges, and payment delays that require a more conservative approach to protect both the factor and the client.
When the general contractor or owner pays the invoice, we remit the remaining balance to you minus a small factoring fee. The process repeats with each new invoice, providing ongoing working capital tied to the work you're performing.
Because construction invoicing is complex and each project is different, Hexagon prioritizes having a thorough understanding of your contracts, your customers, and your billing structure before the first invoice is funded. This upfront investment in understanding your business is what allows us to move quickly and confidently once the relationship is established.
Understanding Retainage and How It Affects Factoring
Retainage is one of the most significant cash flow challenges in the construction industry. On most commercial and public projects, the general contractor or owner withholds 5–10% of each progress payment until the project reaches substantial completion or final closeout. That money is yours — you've earned it — but it's locked up for the duration of the project, which can span months or even years.
It's important to understand that retainage is typically not factorable while it's being held. The receivable isn't yet due and payable, so it doesn't qualify for an advance. However, factoring the non-retained portion of each progress invoice — the 90–95% that is due upon approval — can dramatically improve your cash position and reduce the sting of retainage by keeping the rest of your working capital flowing consistently.
Once retainage is released at project completion, those receivables may become eligible for factoring as well, depending on the terms and timing. Hexagon will work with you to understand your specific contract structures and identify exactly which receivables are eligible at each stage of a project.
Lien Rights and Factoring Considerations
Construction is one of the few industries where your right to get paid is protected by mechanics' lien statutes. These lien rights give subcontractors and material suppliers a legal claim against the property if they aren't paid for their work. However, factoring can interact with lien rights in ways that require careful attention.
Many general contractors require lien waivers — either conditional or unconditional or both — as part of the pay application process. A conditional waiver releases your lien rights only upon receipt of payment. An unconditional waiver releases them immediately. When factoring construction receivables, it's important that lien waivers are handled properly so that your rights are protected while the invoice is still outstanding.
These are the kinds of details that require a factor with real construction industry knowledge — and relationships with legal and risk professionals who specialize in construction. Hexagon has those relationships and brings them to bear on every construction factoring arrangement we structure.
Managing Invoice Aging in Construction
Construction projects typically operate on a regular draw schedule — often weekly or monthly — with payment expected within 30 days of an approved pay application. Unlike other industries where 60- or 90-day payment terms are standard, an invoice that ages significantly past 30 days in construction is not a normal payment cycle — it's a warning sign. It may indicate a dispute over the work performed, a problem with the project itself, a stalled approval process, or financial distress further up the payment chain.
This is exactly why construction factoring requires close monitoring and an experienced eye. Hexagon tracks the status of every funded receivable and maintains regular communication with our clients about the progress of their projects and the payment behavior of their customers. When an invoice begins to age beyond the expected cycle, we work with you to identify the cause and determine the appropriate course of action — whether that means pausing additional advances against that debtor, adjusting the facility structure, or simply waiting for a known administrative delay to resolve itself.
The key is recognizing the difference between a temporary procedural delay and a genuine payment problem. That judgment comes from experience — and from knowing the project, the parties, and the local market well enough to make the right call.
Managing Invoice Aging in Construction
In many industries, an invoice that ages past 60 days is a yellow flag. In construction, extended payment timelines are a reality of the business. However, there is an important distinction between an invoice that is aging within the normal payment cycle of a project and one that is aging because of a dispute, a stalled project, or a financially distressed debtor.
Hexagon monitors the aging of every receivable in our portfolio closely. While we understand that construction payments often move more slowly than in other industries, we also recognize that invoices consistently aging beyond 60 to 90 days can signal problems that require attention. We work proactively with our clients to evaluate aging receivables, identify potential issues early, and make informed decisions about continued funding. The goal is to protect both Hexagon and our client from unnecessary exposure while keeping your cash flow as consistent as possible.
Why Oklahoma Contractors and Trades Work With Hexagon
Construction factoring demands more than capital — it demands a partner who can read a pay application, evaluate a contract, assess the creditworthiness of a general contractor, and understand the risks inherent in a specific project. It requires someone who knows the difference between a conditional and unconditional lien waiver, who understands how retainage works, and who recognizes that a change order can alter the entire financial profile of a receivable.
Hexagon brings that expertise from over 30 years of banking experience that includes hands-on involvement in construction lending. We've evaluated construction projects from the lender's side of the table, and we bring that same analytical rigor to our factoring relationships. When questions arise about legal risk, project viability, or debtor strength, we have established relationships with professionals who specialize in these areas — allowing us to make informed decisions rather than blanket ones.
Construction is also an industry where being local matters. You need a factor who can visit a job site, sit across the table from you, review your project documentation in person, and build a relationship based on more than phone calls and email. Hexagon is based in Oklahoma and built to serve Oklahoma businesses. That proximity is not a convenience — it's a fundamental part of how we operate.