Getting paid in construction is a slow, hard, and stressful process, according to a survey of contractors by Levelset and T-Sheets by Quickbooks. The survey found that three-quarters of respondents felt in the dark about terms or payment timing. To help address some of these challenges, construction payment service company Levelset introduced a new feature, Contractor Profiles.
Contractor Profiles allows anyone to read and share anonymous, real-time reviews, ratings, and details about general contractor payment behavior. The feature already has 7,700 Contractor Profiles, and Levelset plans to publish an additional 10,000 profiles over the next three months.
The profiles include contractor reviews from contractors, subs, and suppliers who have worked with the company in question; payment terms, speed, and retainage ratings for the company; and documents that signify slow or non-payment issues with the company. The feature also offers payment warnings, where users can "follow" and monitor contractors and get real-time alerts when payments are moving slow or if there are any problems connected to the contractor.
The tool comes on the heels of the findings of the second annual National Construction Payments Report, which found that payment in construction took 83 days on average, much longer than in any other industry. The survey found that around half of U.S. contractors do not get paid on time and two-thirds of firms reporting issues were subcontractors. To compound the issues of many contractors, two in five respondents reported they pay vendors before they pay themselves. According to the survey, subcontractors are most likely to pay their vendors before paying themselves.
Many contractors reported having to chase down paychecks, suffering cash flow issues that impacted payroll, company growth, and competitive nature. Over half of respondents in the survey indicated they draw from business savings to deal with cash flow issues and one-third said they use personal credit or savings. The survey also found that three in five contractors do not charge interest on late payments and around half of respondents said they never offer flexible payment options to get paid faster.
The 2019 National Construction Payments Report surveyed 503 construction professionals in August 2019 on myriad topics related to payment.
Levelset's Contractor Profiles are designed to help both general contractors and subcontractors, company CEO Scott Wolfe said in a public statement.
"These profiles provide an important forum to exchange information about the payment practices that can benefit the whole industry," Wolfe said. "By adding a new layer of transparency to how payments are exchanged, it's now possible to stay on top of issues and potential bad outcomes like mechanics liens."
