Delayed payments don’t just hurt specialty contractors, but also create significant challenges for all project stakeholders. Nowhere is this felt more than in construction where it takes longer to get paid than any other industry. In fact, according to the PwC, the construction industry has a days sales outstanding (DSO) average of 90 days.
These delays can strain relationships, put finances at risk and potentially lead to costly litigation. The good thing is that you can fix construction payment problems by taking these proactive steps:
Implementing a construction management platform, with payment processes and documentation built in is the first step in speeding up payments and reducing problems. Using the same technology you use to plan, bid, manage and close out a project, means that general contractors and specialty contractors can simplify and streamline construction’s highly complex payment process.
In addition to the reduced administrative burden to execute payments, utilizing technology to improve on-time payments is a boon for general contractors too. Given the slow payment standards, and the expectation for specialty contractors to carry the capital expense for a project, some have begun offering discounts of 5% to 10% on promptly paid invoices. This mutually beneficial arrangement reduces fees for general contractors while bolstering cash flow for specialty contractors, enabling greater contributions to ongoing and future projects.
Faster payments is a win-win for all project stakeholders. Procore Pay addresses these construction payment challenges head on.
“I think technology can contribute to the solution, and I’m glad Procore is working on it,” said Sarah Bush, Vice President of Operations at Landis Construction.
A faster payment process benefits every project stakeholder in construction by reducing administrative burden, limiting carrying costs, and strengthening business relationships. Procore Pay equips construction professionals with the essential tools to reduce payment cycles and optimize project cash flow.