Factoring is common in the construction industry due to long payment cycles, which can extend up to 120 days and beyond. However, the construction industry has risky features for factoring companies. Due to the risks and exposure of mechanics` instructions, the risk of „paid” conditions, the existence of progress notes, the use of deductions and exposure to business cycles, most „general” factoring companies avoid construction requirements altogether. This has created another niche of factoring companies specializing in construction requirements.  First, your business will likely receive a letter of proposal (not a contract) from the factor that contains some of the terms and conditions that may be included in the factoring agreement. This letter of proposal usually requires your signature and a down payment. The postman will then send you the proposed factoring documents, including the factoring agreement, personal guarantees (if the factor makes advances), a secretariat or management certificate (depending on whether your company is a limited liability company or company), a proposed communication to your clients that your company`s claims have been assigned to the factor, as well as various related documents and agreements. The sale of the debt transfers ownership of the debt to the postman, the factor having all the rights attached to the claims.   As a result, the debt becomes the factor`s asset, and the postman obtains the right to obtain payments made by the debtor for the amount of the invoice, and he is free to wager or exchange the asset without credit without any undue constraint or restriction.   As a general rule, the debtor is informed of the sale of the debt, and the postman invoices the debtor and makes all the recoveries; However, the non-notification factor by which the customer (seller) withdraws accounts sold to the postman as a factor agent also intervenes. The agreement is generally confidential because the debtor is not informed of the assignment of the debt and the seller of the debt withdraws the debt in the name of the postman.  If the factor transfers the debt „without recourse,” the factor (buyer of the debt) must bear the loss if the debtor does not pay the amount of the invoice.
 If the postman transfers the debt „with recourse,” the postman has the right to recover the amount of the unpaid invoice from the seller.  However, all shipments of goods that could reduce the amount of the invoice to be recovered are generally the responsibility of the seller and the factor is generally retained for the payment of the seller for a portion of the debt sold (the „holdback-value of the postman”) in order to cover returns related to the claims in question until the right to return the property is lowered.