Imagine this scenario: You’re almost there. You’ve reconciled ‘amount requested’, compared documents, triple-checked line items, and made sure all lien waivers were properly classified. You even ran through your list of loan covenants to ensure compliance and mitigate risk. Best of all, you managed to do all those things FASTER than your borrower expected. The last thing you need is an approval. You dropped a note on your coworker’s desk this morning and even sent a follow-up email at lunch. No reply. Unfortunately, your coworker is busy on a project, hasn’t seen your request and every minute that goes by your borrower’s satisfaction goes down.
The odds are you’ve experienced the pain of waiting for approvals many times. Approvals are an important part of ensuring loan quality and reducing risk, but they also introduce huge amounts of inefficiency. To make approvals more efficient, start by documenting every part of your process that requires an approval. First, validate the approval is actually necessary and then look at which parties are involved. Next, centralize the approval workflow in the same place that other activities happen.
If you’ve already implemented software to help automate reconciliation and track progress, integrate your approval process in the same system. The best systems allow loan administrators and approvers to see which items need to be approved in a centralized platform, 24 hours a day, 7 days a week. There’s no reason that employees should ever wonder if something has been approved. Instead, give team members the ability to add notes to approval requests and send automated alerts to users who need to provide approval. This eliminates the need to manually draft reminder emails and keeps everyone on the same page. It also prevents approvers from getting approval requests that don’t have enough information.
To finance slow payments, the estimated overhead included in subcontractors’ bids is 2.75% and 5.81% for general contractors. This year’s report uncovered that slow payments to subcontractors and general contractors will create $136B in additional costs for the US Construction Industry in 2021.
General contractors and subcontractors estimate that the cost of floating payments for wages and invoices represents $136 billion in excess cost to the industry, a 36 percent increase from the cost reported in 2020. Findings indicate those costs are passed on to real estate developers and financiers in the form of project delays and higher bids from contractors.
