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 #8 – Spend Time Resolving Discrepancies, Not Finding Them
To increase loan servicing quality and mitigate risk, it’s important to ensure individual line items satisfy loan covenants, don’t overdraw, and have supporting invoices or documentation. Unfortunately, manually reviewing line items takes a lot of time and is susceptible to human error. On the bright side, as you’ve learned from all these steps, modern-day loan administration tools can automate these tasks for you. Instead of going line by line, today’s loan management software can automatically flag items that require the reviewer’s attention. This saves hours of time as the software automatically detects inconsistencies or errors in the data. As a result, you spend less time searching for errors and more time actually fixing them. Ultimately you increase loan quality while decreasing the time it takes to fund a draw.