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.
Construction Lender Efficiency Tip #6 – Automate Pay App Reconciliation and Retainage Calculations
Ahh, good ol’ pay apps. After manually comparing the G702 and G703 there’s a good chance the figures don’t match up or the retainage for the current period is missing. You might also need to manually reconcile the Subcontractor pay apps to the General Contractor pay apps. This is another great opportunity to boost efficiency with technology. Solutions exist today that read the G702 and G703 documents, compare values to the budget and calculate both the current period retainage and any retainage releases. Best of all, they even provide an easy view of subcontractor pay apps reconciled against the GC pay apps.