Report : COVID-19 has slowed payments for GCs and subs
By Jenn Goodman
Dive Brief :
■ Just one construction business in 10 always gets paid in full , a 75 % drop from before the pandemic , according to the 2021 Construction Cash Flow & Payment Report . Payment delays have also worsened : Just 9 % of companies always get paid on time , a decline of 60 % from last year .
■ The report from construction software firm Levelset found that some of the financial risk correlates directly to the construction payment chain . General contractors are four times more likely than subcontractors to get paid within 30 days , and 50 % more likely to get paid in full . One in five subcontractors , suppliers and other sub-tier parties regularly wait beyond 60 days to collect payment .
■ The gap widens even further when it comes to collecting retainage , which 61 % of all businesses say is “ very important ” or “ the most important factor ” for cash flow . Fifty-six percent of subcontractors wait more than 60 days to collect retained funds , compared to just 16 % of general contractors .
Dive Insight :
The study found that payment speed also correlates strongly to project type . Residential construction companies are three times more likely to collect payment within 30 days than those on commercial projects , and five times more likely than those on public projects . And while only one
18 DITCHMEN • JUNE 2021