Slow Pay Adds $40 Billion a Year to Construction Industry Cost

In its Construction Payment Report 2018, construction loan software provider Contract Simply revealed that late payments from customers cost the commercial construction industry $40 billion annually. This represents an add-on to total project costs of 3.3%. The study, conducted in partnership with bid procurement platform Building Connected and covering 1,300 respondents from a variety of trades, found that 88% of contractors wait longer than 30 days for payment and that 46% cover the gap with business or personal savings and credit lines, which result in extra financing fees. More than 80% of those contractors surveyed have filed mechanics' liens against a project in order to ensure they get the money owed to them, incurring unplanned legal expenses. Late payments to subcontractors also prohibit them from meeting their own payroll and invoice payment obligations

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