Waiting to get paid sucks. As a business owner, you have sacrificed a lot, you have put in the work and still aren’t getting ahead because you are constantly waiting to get paid. We often speak to owners of trade contracting companies, and consistently we hear that it is almost impossible to grow their business because they are waiting on hundreds of thousands of dollars and in some cases millions of dollars in outstanding invoices. This can make it almost impossible to make payroll each month. The construction industry suffers from a top down approach, I am sure you have all heard the term “pay when paid”. This concept and top down flow of funds really hurts a lot of people along the way but especially the trade contractors on the site doing the work.
How can the industry improve payment cycles and the flow of funds?
There are several payment application softwares that do help digitize and track that workflow but in my opinion, it’s actually the pay app process, whether digital or not, both processes can still limit the prompt payment process and the flow of funds. There is also a lack of proof around what work is complete to actually back up the entire payment process. You need those updates, they need to exist in order for money to flow.
There are far too many touch points I think which can hurt timelines for what could be considered a “good invoice” and there are just as many touch points for the release of funds back through the stakeholder chain.
Another question that often comes up with our customers is, “if the cash or financing exists, why does it take so long to verify the progress of work and to receive our money?”
We believe that there should be better de-risked payment options to help with the pressure on the flow of funds.