5 Common Reasons Construction Billing Forms Get Delayed

Time is money, and cash flow is king. These statements are well known to every industry, but they can be particularly important in the construction industry. When contractors depend on incoming cash flow to pay for supplies and labor as the job progresses, delays (especially due to construction billing forms) can slow or even stop work on a project. Unfortunately, delayed payments are more common in construction than in practically any other industry. In fact, it's estimated that contractors lose billions each year due to slow or missed payments.

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There are several reasons that payments in the construction industry get delayed. For example, when multiple tiers of contractors and subcontractors work on a project, payments have to work their way down the chain. However, the biggest issues typically come from the payment process itself. Since everything from purchase orders to hours worked and unexpected changes must be documented, each payment comes with many required documents. Not surprisingly, this leaves considerable room for errors. Issues with pay apps are a leading cause of stress and late payments in the construction industry. These are some of the most common problems that delay construction billing forms.

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1. Incorrect or Slow Data Entry

In construction, every payment request needs standardized construction billing forms and supporting documentation. To process the payments, information from each of these documents must be entered correctly. If information from any pay app goes missing or becomes inaccurate, it voids the pay app. This means you have to repeat the entire process. These manual processes are cumbersome to begin with. Repeating them to repair mistakes slows the process even more.

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2. Insufficient Documentation During a Draw Request

In an industry where competitive bidding and slow payments run operations, funding a long-term project requires loans. However, construction loans work differently than other loans. Instead of receiving the money in a lump sum, companies receive portions of the loan over the course of the project. These installments are called draws, and a draw request is required for each payment. Like most things in the construction business, a draw request requires supporting documentation, which includes invoices, receipts, budgets, change orders, and lien releases. If any of these documents are missing, the draw can be denied. A denied draw request can slow or halt production and lead to late payments.

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3. Not Collecting Lien Waivers

Lien waivers support pay apps and draw requests. Contractors, subcontractors, suppliers, and basically anyone involved in a construction project can use them. During an ongoing project, a lien waiver works to show that a worker has been paid for a certain part of the job. When workers supply a lien waiver, the landowner can remit payment knowing the contractor won't file a lien on the property in the future. If workers don't submit all the required lien waivers for a pay app, that delays payment.

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4. Compliance Issues

Construction projects are subject to a variety of federal, state, and local regulations. These building codes and ordinances exist to make sure all structures are safe and poor building practices don't lead to injury. To prove compliance with these regulations, each portion of the project must have careful documentation with paperwork and photos. This documentation proves that buildings are safe and up to code. When these necessary documents or photos are missing, non-compliance can lead to fines or legal charges. Someone must pay these fines in order for the project to move forward.

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5. Forgotten or Lost Documentation

Documentation is a vital part of every step during any construction project. You must submit specific paperwork and photos to support proof of work completed, compliance with regulations, supplies purchased, payments made, changes in the scope of the project, and delays. Perhaps if every construction project had a physical office on-site, keeping up with the deluge of paperwork would be easier. But in the real world, it's simply not possible. When documents come from multiple tiers of contractors and subs, suppliers, and transport, it's hardly surprising that people can lose or forget items. Unfortunately, any missing documentation can lead to late payments.

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Using Technology to Solve Problems with Pay Apps

It's true that construction billing forms can cause complications. By nature, construction projects follow a different set of rules than the supply of other goods and services. You might not be able to change the way you have to process payments in the industry. But you can streamline the process and help eliminate some of the issues that cause delayed payments.

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Construction billing software works in a variety of ways to automate the collection of construction billing forms and streamline the entire payment process. Instead of devoting days at the end of every month to chasing paperwork and processing pay apps, a customized system ensures the right paperwork goes to the right person at the right time. A solution that addresses compliance issues, math errors, missing paperwork, and unapproved change orders to make construction billing easier sounds too good to be true. Yet, it exists and can help your company stop the cycle of payment delays.

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Here's how construction billing software from Flashtract works to eliminate some of the most common issues with pay apps and the cumbersome nature of the construction billing process:

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• The generation of custom pay apps and lien waivers with automatic calculations eliminates math errors.
• Automated reminders ensure subcontractors submit pay apps on time.
• The ability for general contractors to predefine contract amounts and retainage forms improves communication.
• A customizable platform allows you to add compliance requirements.
• Customized workflows prevent delays in the approval process.
• Every pay request automatically routes to the right person at the right time.
• The software is so easy to use that it has a 100% subcontractor adoption rate.

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Upgrade Your Processes to Reduce Construction Billing Form Delays

In the past, people have accused the construction industry of being slow to utilize technology for advancement. But most systems designed for typical offices can't address the complicated nature of construction billing or construction billing forms. Finally, a solution exists that meets the needs of construction and can eliminate most of the pain points that lead to late payments.