The following content is sponsored by GCPay.
Payment applications are documents that provide details on labor, materials, change orders, and other construction project specifics. Essentially, it’s a request for payment with supporting documents and pictures. Common support material in applications for payment include:
- Payment Application Form
- Schedule of Values
- Change Orders
- Lien Waivers
- Project Status & Schedules
- Additional Invoices & Receipts
- Visual Documentation
Even though reviewing payment applications is slow and complex, research shows that fewer than 1 in 3 general contractors use software to organize, send, and track payments and paperwork. I recently spoke with a few customers to see how much time they really spend per payment application.
General contractors spend…
- about 10 minutes gathering the required documents (AFP, lien waiver, backups)
- about 15 minutes reviewing progress by project team
- about 5 minutes entering the invoices into ERP
- about 5 minutes ensuring compliance requirements have been met
- about 5 minutes preparing required lien waivers post-payment and collect from the sub
That means it takes about an hour to manage each application for payment.
Payment Application Automation
A year of growth! The American Institutes of Architects’ Consensus Construction Forecast predict non-residential construction will grow 4.6% in 2022. In Canada, non-residential construction growth is expected to be about 23.6%.
As the volume of projects increase, general contractors recognize the advantages of subcontractor payment technology. Construction technology aims to simplify complex processes, optimize efficiencies, and organize paperwork. Let’s talk specifically about payment applications and how automating the process will boost your productivity and profitability.
That’s right, payment application software automates payment and organizes paperwork between the general contractor and subcontractor. Start imagining all the inefficiencies you can do away with!
Whether you’re the CFO, controller, project accountant, or financial analyst, you’ll use application for payment software to:
- Track pay apps
- Review monthly statements
- Monitor the progress of your projects
- Approve expenses
- Oversee financial operations
- Ensure project billings are issued and payments are collected and distributed
- Confirm compliance is met and waivers are collected
Since you probably have to put a business case together and cite the ROI of construction payment software, I’ll break down the return on investment so that you can quickly see the value and put your business on the path to proficiency.
Payment Application System ROI
Implement technology. Simplify your application for payment process.
GCPay’s functionality reduces the amount of time spent processing payment applications. While the ROI of GCPay starts with the payment process, we ultimately touch the efficiency of your business as a whole.
GCPay provides internal transparency, improves process controls, eliminates manual paper-based liens, and ensures the accuracy of your accounting processes, .
Although there is an obvious upfront benefit from keeping all your projects in one place, the substantial value of is realized over time as users become more familiar with the platform and your team loads more of your projects in GCPay—reducing manual processes.
Plus, Less Wasted Time
Most general contractors say they spend too much time chasing down payment applications. After all, managing construction payments is often manual and unorganized. If your current pay application management process takes about an hour, then you’re wasting valuable time!
With payment application software, general contractors can:
- Easily create and exchange lien waivers
- Organize and collect compliance documents
- Protect projects against delays
- Improve communication with subcontractors
Technology will become incorporated with your construction projects. It will improve performance, boost productivity, and reduce risk.
Being comfortable with technology is paramount to a contractor’s success and as important to their vision to bringing construction projects to life. The industry has razor-thin profit margins, particularly for general contractors, so being able to execute projects efficiently means using technology to manage projects. The reality of any construction project involves many change orders, which impact the timely completion and profitability of construction projects.
A variety of factors account for poor productivity and cost outcomes. Here’s a few of them:
- Lousy organization
- Inadequate communication
- Inconsistent reports – subcontractors, contractors and owners do not have a common understanding of how the project is going at any given time
- Outdated processes
- Inaccurate billing
These problems are serious, systemic and all too common.
What’s The Point?
Sure, your company could build an accounts payable army to manage your pay apps—that fixes the short-term problem. But it also compounds the micro-issues like unapproved change orders, subcontractor billing errors, and constant emailing.
We want to get the bottom of this and help you build a holistic approach to solving these issues. Here’s a few ways we can do that:
- Custom payment workflows and automation
- Creating and exchanging lien waivers
- Managing all compliance documents
- Integrating directly with your ERP or accounting system
- Processing electronic payment
- Customized reports
- Fully remote online notary
Add all this functionality together, and instead of costs-incurred, it’s costs-saved.
Indiana-based multifamily and residential housing contractor Cityscape Residential is a newer GCPay customer. The firm was looking for a way to improve the accounting and subcontractor billing part of the payment process. What used to take 4 days has become 4 hours. Cityscape’s president of construction, Mike Patarino, confirms, “In construction, we’re controlled by our pay application process. I told our CFO, if for any reason, you want to get rid of GCPay, I’ll quit.”
He’s not alone.
Dome Construction, one of leading construction firms in San Francisco implemented GCPay over a decade ago. In that time, Dome Construction’s billing supervisor Carmina Cardenas, concludes, “It’s made us a better general contractor. Subs always know where they are in the payment application process, and they get paid on time because GCPay is perfectly accurate.”
Relationships with trade partners in today’s environment is more important than ever. Reshape your conventional paper- and spreadsheet-based processes to an automated invoicing compliance and lien waiver management platform for workflow ease and build rapport.
There you have it—if your goal is to automate, integrate and simplify the application for payment process, we’re with you every step of the way. We’ll help you eliminate unapproved change orders, reduce billing errors and free up your time do other important tasks that will ultimately save your company precious time and money.
If you want to explore GCPay a little more and find out how we can best fit your needs, feel free to get in touch with us. Let’s take back your time!