Factoring Blog

How Cable Installers Can Benefit from Factoring Receivables

Many cable installers run very profitable businesses, especially those that work as subcontractors for the large providers such as AT&T, Time Warner or Comcast. While they can be demanding as clients, working with large customers can help ensure a steady supply of new orders and financial stability for your company. However, your company can also run into financial problems if you don’t manage your cash flow carefully. That is because large companies pay their invoices slowly.

Slow payments = cash flow problems

Most large providers pay their invoices on a 30 to 60 day schedule. So your installation business has to pay it’s workers, buy supplies, do the installation work and then wait up to 60 days to get paid. Obviously, if you have substantial cash reserves, this won’t be a problem.  But if you don’t have a big reserve, you could run out of money. This could force you to delay payroll, avoid paying suppliers, or put you out of business altogether.

Many of these problems will hit you when you are growing the fastest – because that is when you have the largest demand for cash flow.

Can a loan or line of credit help?

Sure, if you can get it. When faced with these problems, most installers go to their bank hoping to get some alternative business financing. However, they soon learn that getting a business loan is very hard because of the collateral standards and reporting requirements. As a matter of fact, few loans are ever granted to cable installers. But a loan is not the only or the best solution to this problem. There is an alternative called factoring that works with companies that can’t get a business loan. Often, it provides better results.

What is factoring? How does it work?

Factoring your receivables can provide you with reliable and predictable cash flow.  It works by financing your receivables through a specialized funding company. It provides you with a substantial advance on your invoices, ensuring that you have funds to pay employees and suppliers. Receivables factoring works as follows:

  1. You complete the work
  2. Send an invoice to the cable or telecommunications provider
  3. Send a copy of the invoice for financing. Get an immediate advance of 80%
  4. Once your client pays the invoice, you get the remaining 20% (less fees)

The fee will vary based on how much you invoice per month and can range from 1.5% to 3% per month.


The most important advantage is that you will be able to offer 30 to 60 day terms to your cable carriers without having to worry about the consequences of a slow payments. Your cash flow will improve, which will enable you to manage your business more effectively. Also, your financing line  is tied to your receivables, so it can grow as your sales increase. This last point is very important if your firm is about to expand.

One of the most attractive features of factoring is that it is easy to obtain. To qualify, you need to work with clients that have solid commercial credit. That is an advantage for the cable industry because most providers have great credit. Aside from that, your invoices need to be free of liens and your company should not have serious financial problems.

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