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5 Reasons Construction Billing Certification Gets Delayed

Cash flow is king, and time is money. Every industry is aware of these claims, but the construction sector may find them to be especially significant. Delays (particularly because of construction billing forms) can cause work on a project to slow down or stop entirely when contractors rely on incoming cash flow to pay for supplies and labor as the task advances. Regretfully, compared to almost every other industry, construction has a higher rate of delayed payments. In fact, it's believed that delayed or missing payments cost contractors billions of dollars annually.

‍In the construction industry, payments might be delayed for a number of reasons. Payments must flow down the chain, for instance, when several levels of contractors and subcontractors are involved in a project. But the payment procedure itself usually causes the most problems. Each payment includes a number of necessary paperwork because everything needs to be recorded, including purchase orders, hours spent, and unforeseen adjustments. It should come as no surprise that there is a lot of space for error. In the construction business, pay app problems are a major source of stress and late payments. These are a few of the most typical issues that cause construction billing forms to be delayed.

1. Incorrect Measurements

Standardized construction billing forms and accompanying paperwork are required for each payment request in the construction industry. Each of these documents contains information that needs to be accurately input in order to process the payments. Any pay app will be nullified if any of its data disappears or changes. This implies that the entire procedure must be repeated. To begin with, these manual procedures are laborious. The process is further slowed down by repeating them to fix errors.

2. Insufficient Documentation Related to Measurements & Quality of Material Reports

Financing construction projects requires loans in an industry where slow payments and competitive bidding are the norm. But construction loans operate in a distinct way from other types of loans. Companies get sections of the loan over the life of the project rather than the entire amount in one go. These payments are referred to as draws, and each payment requires a draw request. A draw request necessitates accompanying documents, such as budgets, change orders, invoices, receipts, and lien releases, just like most other construction-related transactions. It is possible to reject the draw if any of these documents are lacking. Payment delays might result from a draw request being denied, which can hinder or stop production.

3. Not Collecting Lien Waivers

Lien waivers enable draw requests and pay applications. They can be used by suppliers, contractors, subcontractors, and pretty much anybody else working on a construction project. A lien waiver is used to demonstrate that an employee has been paid for a specific portion of a project that is still in progress. The landowner can send money knowing that the contractor will not later place a lien on the property when workers provide a lien waiver. Payment is delayed if employees fail to provide all of the necessary lien releases for a pay app.

‍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.

‍5. Forgotten or Lost Documentation

Every stage of a construction project must include documentation. To provide documentation of work accomplished, adherence to rules and specifications, purchased materials, payments made, modifications to the project's scope, and delays, you must provide specific documents and images. Perhaps managing the mountain of paperwork would be simpler if each construction project had a physical office on-site. But that's just not feasible in the real world. It should come as no surprise that people can misplace or forget items when documents originate from several levels of suppliers, transportation, and contractors and subcontractors. Sadly, any missing paperwork may result in payments being made after the deadline.

Using Technology to Solve Problems

A contractor can complete electronic forms for construction invoicing. It's true that there may be issues with construction billing forms. Building projects are by their very nature governed by different regulations than the provision of other goods and services. It's possible that the way the industry requires you to handle payments cannot be changed. However, you can help to simplify the procedure and get rid of some of the problems that lead to late payments.

‍Numerous techniques are employed by construction billing software to automate the gathering of construction billing forms and optimize the entire payment procedure. A personalized system makes sure the correct paperwork gets to the right person at the right time, saving days at the end of each month spent tracking down paperwork and processing pay applications. It sounds too good to be true, but there is a way to simplify construction billing that deals with unapproved change orders, missing paperwork, math mistakes, and compliance issues. Still, it does exist and can assist your business in breaking the pattern of late payments.

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

Automated Creations of Measurements (quantities) for each time period

  1. Automated compilation of bill (costs) based on PO rates

  2. Linking of material consumption reports

  3. Trackability to when work was actually completed

Upgrade Your Processes to Reduce Construction Billing cycle

The construction industry has been criticized in the past for adopting technology slowly and failing to advance its use. However, the majority of systems made for regular offices are unable to handle the intricate nature of construction billing or the forms associated with it. Most of the process use excel, which has siloed data structure. Eventually, a solution that is cloud based portal, satisfies construction requirements and can get rid of the majority of the issues that cause late payments has been found.


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