Question 1

What is the construction payment process?

Emily Johnson · Accepted Answer

The construction payment process starts with the homeowner who pays the general contractor who then pays the subcontractors and finally these subs pay their suppliers. Getting the homeowner to pay invoices on time is vital to ensure all payments run hassle-free down the line.

Question 2

What are typical terms for construction payments?

Emily Johnson · Accepted Answer

There are a number of different construction payment terms. Typically, construction payments are due 30 days after an invoice. The flow of who gets paid when and whether or not a retainage is used are all up to the builder. Here are a couple items to consider:

Prepayment: Prepayment is required so contractors can secure materials, equipment and a crew. A typical prepayment runs about 20-33% of the job.
Net 10, 30 and 60: A net payment means payment is due 10, 30 or 60 days from the date of the invoice.
Pay-when-paid: This is a common clause in a contract that means the subs on the job will get paid when the homeowner pays the general contractor.
Retainage: When a general contractor withholds a percentage of a subcontractors payment until the job is finished.

Question 3

What are the different types of construction payments?

Emily Johnson · Accepted Answer

The most common type of construction payment is a net payment, meaning the invoice is due a set amount of days from the issue date. For longer projects, it’s typical to pay an upfront deposit and then to pay the contractor monthly until the job is finished.

Question 4

How do general contractors get paid?

Emily Johnson · Accepted Answer

The most efficient way to manage construction payments is by using a construction payment software such as Buildertrend Payment. Why? Because it takes the awkwardness out of asking for money. A written construction contract should clearly state the expected payment schedule. Once you have that contract in place, your clients will pay all invoices via email. No emails or phone calls begging to get paid.

Question 5

How do taxes affect a construction project’s budget allocation?

Julia Thompson · Accepted Answer

Taxes directly impact total project costs and should be included in estimating to avoid margin erosion or pricing surprises.

Question 6

How should builders include taxes in construction project budgets?

Julia Thompson · Accepted Answer

Taxes should be built directly into line-item estimates and automatically updated when project costs change.

Question 7

How can builders monitor tax payments during a project?

Julia Thompson · Accepted Answer

Using connected financial software helps track tax calculations, invoice tax collection and reporting in one system.

Question 8

How can tax regulations influence project timelines?

Julia Thompson · Accepted Answer

Tax compliance issues can delay invoicing, payment processing and project closeout if errors require corrections or additional documentation.

Question 9

Why is connected tax management important?

Julia Thompson · Accepted Answer

Connected tax management improves pricing accuracy, reduces manual work and creates better financial transparency for both builders and clients.

Question 10

What is WIP in project accounting?

OGM Staff · Accepted Answer

Work in progress for project accounting is the total accumulated costs or revenue on a project that’s still in progress. Actual project costs and revenue for hours and expenses are tracked to understand the financial status of a job.

Question 11

How do you analyze a WIP report?

OGM Staff · Accepted Answer

A construction work in progress report can be analyzed in near real-time through a comprehensive report. You’re able to see accurate data for total construction billings, profit margins and cost to complete on individual jobs or all in-progress jobs.

Question 12

What challenges can arise with WIP reports?

OGM Staff · Accepted Answer

According to Viewpoint, construction accounting departments use spreadsheets for 59% of their processes, and project managers use spreadsheets for 45% of their work. This means, more often than not, project financials are being tracked manually.

Managing spreadsheets can be great for some things, but not for constantly changing data on construction WIP reports. Manually entered data is not only outdated minutes after it’s updated, but it can also lead to other problems like:

Human error in data updates
Unnecessary double entry
Inconsistencies in information

All of these issues can be avoided with Buildertrend’s WIP reporting software. Updates are made in real time with the latest information, so you always know where each project stands.

Question 13

Do you want a high or low WIP report?

OGM Staff · Accepted Answer

When it comes to your construction WIP reports, you want to find a balance. A high WIP report can mean your team is working on too much at once and not meeting their project deadlines. On the other hand, a low WIP report means too many things are sitting without progress due to issues like third-party delays.

Using WIP reporting software can ensure you’re always where you need to be. Check the status of each project regularly and make adjustments as needed before it’s too late.

Here are the results for "How Curate Design + Build transformed its selections process"

Filter By Resource

Case Study

Wamhoff Design | Build: Improving construction team communication with Buildertrend

Case Study

Tass Construction: Custom builder delivers a superior client experience with the help of Buildertrend

Blog

Top 10 features to look for in home builder software (and how they drive profits)

Blog

5 ways to balance speed and accuracy when creating construction estimates

Blog

How do general contractors get paid without the runaround? Tips you need to know

Blog

Construction taxes: How builders improve tax accuracy from estimate to final payment

Blog

Affordable luxury redefined: Building semi-custom homes that wow without the price tag

Blog

Why you should be using a WIP report in your construction business

Still have questions or need our help finding a resource?