Invoice Factoring for Landscaping Companies: Getting Paid on Commercial Contracts

When Factoring Works for Landscaping

Most residential landscaping work is paid on completion or with small deposits—no receivables to factor. But landscaping companies with commercial accounts often face 30-60 day payment terms that create cash flow gaps.

For these companies, invoice factoring converts receivables into immediate working capital.

Commercial Landscaping Receivables

Commercial landscaping work commonly includes property management company contracts, corporate campus maintenance, HOA and community maintenance, retail and shopping center grounds, municipal and government contracts, and general contractor subcontracting.

These customers typically pay on terms—Net 30 or Net 60 is standard—creating the receivables that factoring addresses.

How Factoring Works

You complete commercial landscaping work and invoice your client. Instead of waiting 30-60 days, you sell the invoice to a factoring company. They advance 80-90% immediately, then collect from your client. When paid, you receive the remaining balance minus the factor's fee.

Factoring Costs

These costs should be built into your commercial pricing. If you're bidding work at margins that can't absorb factoring costs, you may need to reconsider pricing.

Enabling Commercial Growth

Factoring can enable commercial growth that cash flow constraints would otherwise prevent. Large commercial contracts often require significant working capital—you're paying crews weekly while waiting 60 days for payment.

Without factoring, you might have to turn down large commercial contracts. With factoring, you can grow your commercial book without cash flow constraints.

Seasonal Considerations

Landscaping's seasonality affects factoring strategy. Peak season generates the most receivables and the most factoring benefit. Off-season may have fewer invoices to factor.

Some landscaping companies factor heavily during peak season to maximize working capital, then reduce or pause factoring during slower periods.

Choosing a Factor

Look for factors comfortable with seasonal businesses and construction/landscaping work. Key considerations:

• Advance rate: 80-90% typical
• Fee structure: Flat vs. tiered rates
• Minimums: Monthly volume requirements
• Contract flexibility: Ability to factor selectively
• Recourse terms: Your liability if clients don't pay

Factoring vs. Line of Credit

For landscaping companies with both residential and commercial work, a line of credit might be more flexible than factoring—providing working capital regardless of invoice timing.

Factoring makes most sense when commercial receivables are substantial and consistent, you want the factor to handle collections, or you can't qualify for a line of credit.

Some companies use both—a line of credit for general working capital and factoring specifically for large commercial invoices.

Is Factoring Right for Your Landscaping Business?

Factoring fits landscaping companies with significant commercial/contract revenue (not primarily residential), customers who pay on terms (Net 30+), growth ambitions requiring working capital, and margins that can absorb factoring costs.

If your business is primarily residential with immediate payment, other financing tools like lines of credit serve you better.