The construction industry is plagued by slow payments. In fact, making payments is slower in construction than in any other industry – 83 days on average1.
This practice is so commonplace that the industry accepts it as a natural cost of doing business. The reality is slow payments are avoidable. Payments shouldn’t be the problem, but rather, the solution.
Accepting online payments, specifically credit card payments, is your best first step in the right direction. Through Chase’s integration with Buildertrend, we’ve gained perspective on two of the most common misconceptions that come with accepting credit card payments. Today, we’re putting them to rest.
1. Cost: A worthwhile investment
Of midsized and large U.S.-based businesses, 59% report that cost is one of the biggest challenges that inhibits their acceptance of credit card payments.2 Sure, changing and rolling out new processes can demand resource commitment. And it’s sometimes hard to predict the return on investment. That being said, neglecting to have credit card payment as an option will put you at a disadvantage.
Relying on manual processes is inefficient and will end up costing more than modern, automated payment processing. While there may be an initial capital expense and recurring investment to accept card payments, it’s a worthwhile expense when you have benefits like faster payments, higher security for your clients and consistent cash flow.
2. Security: Checks – not cards – are the culprits
When it comes to security, both credit card vendors and consumers say security is a top priority when they process or provide payment. Of all the credit card retailers in North America, 88% say security is the number one factor when selecting a new acquiring bank to be their payments processor.3 Consumers feel safer using a credit card knowing their purchases are covered by fraud and risk protection.
With so much importance placed on security for both sides of the transaction, it’s surprising that checks are the most popular payment method in the construction industry.
Research shows that 61% of North American merchants accept checks4 despite a number of negative marks on this transaction type. A few of the downsides of checks include:
- Slower payment: With physical checks, 35% of checking account transactions did not clear until four to six days after the transaction.5
- Lower sales volume across industries: Only 14% of merchants’ total consumer payments are done by check.6
- Lower necessity: Of surveyed businesses, 34% report that checks aren’t necessary, but there’s no way to eliminate them.7
What’s most concerning, though, is how common check fraud is. Checks are the most targeted payment method for fraud as reported by 66% of organizations.8 With checks acting as the main temptation for fraudsters and organizations of all sizes as targets, check transactions are a significant threat to payments security.
In a survey of businesses in the U.S., 52% of midsized and 71% of large businesses reported that payment fraud associated with paper checks is somewhat of a significant pain point.9 Combine that fact with consumer preferences, and it’s safe to say security concerns on both sides of a transaction can be mitigated with online credit card payments.
Payments: It’s time to stop chasing them
In our research with Buildertrend, we’ve found that 80% of construction companies spend a significant portion of their work week chasing down payments.10 It’s also clear that cost and security are top of mind for many businesses who have not yet prioritized card payment acceptance. With accessible cost options and a gradual pivot away from check usage, accepting credit cards is the solution that their clients want and need.
Activity within Buildertrend shows credit card payments have seen a steady increase year over year. Throughout 2019, there were a total of 104,576 credit card payments compared with 141,417 credit card payments in 2020.11 That’s a 35% increase! This shows that clients want to hire contractors who make it easier for them to make payments. It also shows that subcontractors want to work with builders who make it easier for them to get paid.
There’s a better way to get pay and get paid with Buildertrend and Chase
If you’re a current Buildertrend customer, it’s clear you value technology to better your business and your client experience. It’s time that your approach to payments follows suit. At Chase, we’re proud to partner with Buildertrend to power the possible with online Payment Processing.
It’s cost-effective and safe for you, your clients and your subs. Get started with online payments today.
Sources:
1 https://www.levelset.com/blog/2019-national-construction-payments-report/
2 Aite Group’s survey of 213 U.S.-based midsize and large business, February 2021
3 Aite Group and Visa Inc. survey of 154 North American merchants in Q4 2017
4 Aite Group and Visa Inc. survey of 154 North American merchants in Q4 2017
5 Aite Group and Visa Inc. survey of 154 North American merchants in Q4 2017
6 Aite Group and Visa Inc. survey of 154 North American merchants in Q4 2017
7 Aite Group survey of 213 U.S.-based midsize and large businesses, February 2021
8 2021 AFP Payments Fraud and Control Survey
9 Aite’s Group survey of 213 U.S.-based midsize and large businesses, February 2021
10 https://www.levelset.com/blog/2020-report-construction-wasted-time-slow-payment/
11 https://buildertrend.com/blog/online-payment-processing-data/
About The Author
Gerard Vicente
Vice President of Marketing at Chase
