It’s no secret that the managing applications for payment is one of the most complex and frustrating processes contractors face today. While data shows the construction industry has been slow to innovate and add technology-based solutions (source: Construction Dive), we believe this trend is changing. The truth is that manual, paper-based processes create bottlenecks in your workflow, and bottlenecks cost time and money. In the competitive field for GCs in North America right now, we can’t afford to be losing time and money over subcontractor pay apps.
Read on to discover our five recommendations for what you as contractors can do today to start reducing headaches around processing applications for payment.
1. Schedule a Meeting With Your Accounts Payable Team
First and foremost, we recommend sitting down with the team that manages incoming applications for payment for your company. For many accounts payable teams, processing pay apps is a manual process that takes hours and hours each week. While the process itself may work just fine, ask your team and we imagine they’ll say they spend the majority of their time chasing down missing or expired lien waivers, letting subs know they can’t bill against unapproved change orders or recalculating retention that has been figured wrong.
This back and forth communication and follow-up that your team has to conduct for each pay app is one of the biggest reasons the process becomes a bottleneck. If you’re at all unsure about what’s slowing you down with pay app processing, ask your team.
2. Review Your Lien Waiver Process
Lien waivers often cause another slowdown in the application for payment process. While the bulk of the work on these and other compliance documents rests with the subcontractor, there are still ways you can help speed up the process.
For example, are you providing the most up-to-date waivers for your subs to use? Are you making it clear when waivers must be submitted? Do you have a submission system in place, or are waivers coming in several different ways? Do you have automated emails that go out to your subs to remind them to submit their lien waivers? Streamlining how you provide and receive lien waivers can significantly reduce the amount of time subs (and your accounts team!) have to spend on them.
3. Communicate With Your Supply Chain
We know it’s easy to get bogged down in the day-to-day of keeping all your jobs running smoothly, but open communication is paramount to a successful supply chain. Connecting with your subs is a good way to identify pain points or speedbumps that could be easily smoothed out while also identifying key ways to keep owners happy along the way.
Alicia Barbas, Accounting Manager at T. Morrissey Corporation in California, comments that the general contractor is often a “middle man” between the owner and the subs on a project. They have to be sure there’s appropriate visibility for the owner to see progress and payment information on the project as well as transparency for the sub to understand the contract and project details. For T. Morrissey, GCPay helps provide an organized overview of necessary information both up and down the supply chain.
4. Consider Electronic Payment
Paperless invoices are the way of the future, but it’s taking our industry some time to catch up. Electronic invoice processing is a way to save time and increase visibility across your supply chain. Not to mention the added level of security with a trackable electronic payment versus a physical check. Electronic payment significantly speeds up the processing needed for each invoice, which helps get payments out the door and keeps projects running on time. This process also ensures that the exchange of a lien release and electronic payment happen simultaneously in order to reduce liability risk.
5. Explore GCPay For Subcontractor Payment Management
GCPay can easily cut the time spent on pay app and lien waiver management in half. Direct integrations with the industry’s major ERP systems eliminates the need for manual data entry as contract data is shared automatically. Real-time contract and project data is available for GCs and subcontractors to stay on top of their projects and keep things running smoothly.
Click here to schedule a call with a member of the GCPay team. We’d love to walk you through how GCPay can help your business.