Your construction team has been working tirelessly on a project, but recently, you’ve hit a standstill. You need your client to release additional funds so that you can pay your staff and purchase essential materials and equipment, but no matter how long you want, the payment never comes. What could be causing this mysterious delay?
It could be one of the common causes of late payments in construction listed below.
Cash flow issues
If the total cost of construction exceeds expected costs, a client may run out of money mid-project and need extra time to procure additional funds. Until they procure these funds, they won’t be able to provide payment on schedule.
Poor communication
It’s crucial that you communicate any deviations from the original plan with your clients. Otherwise, it could lead to payment-pausing disputes down the line.
Let’s say a bad storm damages your existing work, forcing you to redo certain parts of the project. If you don’t communicate this with the client, they may wonder why work is taking longer and costing more than initially agreed upon and will withhold payment as a result.
A quick, simple conversation with the client could easily prevent this dispute.
Incorrect or missing payment requests
Another common cause of late payments in construction is incorrectly filled-out or missing payment requests. Payment requests are a standardized form of documentation that needs to be filled out properly, or else they can’t be processed.
If information is entered inaccurately or is accidentally deleted, the pay request is rendered void, and the payment won’t come through until the information is fixed or re-entered.
Non-compliance
The work you do needs to comply with federal, state, and local regulations. To prove compliance, you need to carefully document the work you do via pictures and paperwork. If your work is found to be non-compliant, you may be charged a fine or fee and told work can’t continue until you pay said fine or fee.
Someone needs to pay this fee, but your client may not be keen on doing so and may insist that you foot the bill instead.
Payment delays can happen for a myriad of reasons, from the client lacking hard cash to filling out incorrect payment forms.
Since payment delays can impact project timelines, it’s crucial to pinpoint the cause of them and sort them out as soon as possible so that your team can resume working as slated.
