The following content is sponsored by GCPay.
We’ve all been closely watching and monitoring the current economic situation both here at home as well as around the world. And construction professionals have been concerned about how resilient the construction industry really is during these times. Whether it has been what we’ve read and heard from colleagues, news reports, or analysts’ insights around new construction project numbers and continued investment in infrastructure and building development, it’s clear that we’re facing some significant challenges.
Managing cash flow has become all the more critical right now which probably doesn’t come as a surprise. However, what might come as a bit of a surprise is how much currency exchange takes place on a typical project between the GC and all its subcontractors.
Did you know that, on average, payments between a GC and their subcontractors are over two thirds of the cost of a project’s total? That’s a lot of cash flow to manage, both incoming and outgoing. And you’ve heard the term “pay when paid.” This means that having timely accounts receivable (A/R) practices between the GC and owner or financier is equally as important as having efficient accounts payable (A/P) practices to the supply chain.
There’s nothing more frustrating than waiting to be paid, regardless of where you fall in the order. Getting paid quickly means ensuring your supply chain is paid timely as well as ensuring solid trustworthy relationships down the road. Making mistakes is not an option and double entry accounting processes can not only contribute to mistakes but is a time-intensive and painstaking way to invest serious energy.
Paying subcontractors for their work also requires what seems like endless amounts of paperwork, from compliance documentation to lien waivers. Did you know that just this part of subcontractor management can take the equivalent of two working days a week? It doesn’t have to be. Managing subcontractors and paying them on time, every time can be much easier.
That’s where additional technology can help. Additional technology that is integrated with today’s leading construction enterprise resource planning (ERP) systems can help you with more effective cash management practices by automating and managing this entire process — from collecting contracts, managing compliance, and lien waiver documentation to paying subcontractors for work throughout the life of a construction project.
Often, it can even pay subcontractors electronically if so desired. All the while, eliminating mistakes and double entry accounting processes. This will leave you with more time to help your C-suite in more effectively bidding, winning new projects, forecasting revenue, income, and profits to managing your cash flow towards all of this. And by giving you the confidence that you can indeed “pay when paid”.
Managing cash flow, especially the payments between you the GC and all your subcontractors, has never been easier or more efficient!