HPD Software launches solution for lenders seeking to break into construction finance
HPD Software, a leading provider of IT solutions to factors, invoice discounters and asset based lenders, has launched Aquarius Construction Finance specifically for lenders who fund construction sub-contractors.
The module creates a new opportunity for finance providers to enter or expand into the construction sector, traditionally a ‘no-go zone’ for commercial lenders.
Aquarius Construction Finance provides a mechanism to protect the lender by managing the overall construction contract. It tracks the cumulative billings against contract value and aligns this to the certificates issued for works completed and eventual payments. The system applies the contract terms in respect to main contractors’ discounts, retentions and withholding tax. It caters for sector nuances, such as variations to the contract, materials on site, additions and deductions to the contract scope and counter claims (disputes) that affect the collectible debt. Aquarius provides specific risk rules to lower exposure depending upon the evolution of the contract; in particular final account status and situations where the sub-contractor is over applying for works completed.
The system follows the general ‘self-service’ spirit of Aquarius by allowing the sub-contractor to enter applications online, with funds being drawn in a similar way. The sub-contractor is able to view the ledger-card for each contract so they are fully up-to-date in respect of the contract progression in terms of applications, certificates and payments.
Kevin Day, chief operating officer, HPD Software, said:
“The construction sector has historically been a difficult area to finance due to its complexity and risk profile. The majority of banks and finance providers have tended to shy away from this ‘unfactorable’ debt, although a clear need for financing exists.
“Current solutions are labour intensive with manual recording and tracking processes. Lenders generally rely upon spreadsheets to track contracts, with the inherent risk that this method causes.
“Finance providers servicing these sub-contractors with invoice finance need lending software to make the process as seamless, efficient and risk averse as possible, which to date has not existed. In response to industry feedback and extensive cooperation, we have developed Aquarius Construction Finance, which we are now pleased to launch in the market.”
HPD Software believes the introduction of the new module reduces the lending risk to the finance industry. It also enables finance providers to devise solutions for other industries that rely upon stage payment contracts.