HPD launches Aquarius Construction Finance

Finance providers can now use specialised software to operate in the construction sector, which was traditionally a 'no-go zone' for commercial lenders, due to its risks and complexities. This breakthrough comes as the result of recent developments carried out by HPD Software - the leading provider of IT solutions to factors, invoice discounters, supply chain finance programmes and asset based lenders.

HPD's new technology, Aquarius Construction Finance, has been designed in collaboration with one of its key industry clients - specifically for lenders who fund construction sub-contractors. The module provides a solution to help protect the lender by managing the overall construction contract.

The software also helps lenders by catering for construction sector nuances such as variations to the contract, materials on site, deductions (main contractor’s discount, retentions, CIS), additions to the contract scope and counter claims (disputes) that affect the collectible debt; all complexities which may have held them back from providing finance in the past. By tracking the overall contract, special rules are applied to detect key risks. The finance company can then choose to restrict funding, where applicable.

The system follows a 'self-service' approach, allowing the sub-contractor to enter applications for payment 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 at 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 construction 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 construction industry. It also enables finance providers to devise solutions for other industries that rely upon stage payment contracts.

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Read the September 2016 issue of Construction Global magazine