Cleaning is delivered every night and billed once a month. The labour is paid weekly, the supplies are bought up front, and the invoice goes to a property manager who may take another month to approve it. Margins are thin enough that a single delayed payment can matter.
How contract cleaning is invoiced
Most commercial cleaning runs on a contract with a fixed monthly value per site, sometimes with extras for periodic work such as carpet cleaning or window washing. The invoice is raised at month end for the contracted amount plus any approved extras.
Verification therefore rests on the contract and on evidence that the service was delivered. Site sign in records, supervisor inspections and client sign off sheets all serve that purpose. Where the client has never complained and the contract is fixed, the invoice is easy to substantiate.
Why receivables build up
- Wages are paid weekly, while invoices are raised monthly.
- Supplies and equipment are bought before the first invoice is paid.
- A new contract usually means hiring and training before revenue arrives.
- Property managers often pay several contractors on one approval cycle.
- Margins are narrow, so a late payment is felt immediately.
How factoring is used
A cleaning company sells its monthly invoices once the service period has ended and the invoice has been issued. Under a notification arrangement, the client is told to pay the provider, which then handles reminders. The company receives an advance, pays its staff, and receives the reserve less the fee when the client settles.
The arrangement suits businesses adding contracts, because each new building requires staff and supplies before it produces income. It also suits companies whose clients are large property managers with slow approval processes.
Sector cautions
Cleaning contracts are often won on price, which means the margin left to absorb any financing cost is small. A company should work through the arithmetic on its own contracts before committing, because a fee that looks modest against an invoice can be significant against the profit on that invoice.
Client complaints also matter more than in most trades. A single unresolved complaint about quality can hold an entire monthly invoice, since there is no partial delivery to fall back on. Inspection records and a prompt response turn that from a dispute into a conversation.
Finally, where a company subcontracts part of its work, the subcontractor invoices fall due on their own schedule. The provider's arrangement covers your invoices to clients, not your obligations to subcontractors.
Questions to ask a provider
- Do you require site records alongside a monthly invoice?
- How are extras and periodic work treated?
- Will you buy invoices from each of my clients, or only some?
- Is there a minimum invoice size?
- Is the arrangement recourse or non-recourse?
Related guides
For city context read the Toronto guide, and for the structure read full turnover factoring or spot factoring. The process is explained in how invoice factoring works.