Many general contractors spend hours each week printingchecks and other documents to pay their subcontractors. What if there was afaster way to process payments and save the company money at the same time? Theanswer is electronic payments. They are faster, cheaper, and more secure thanmailing checks. We’ve put together a list of six benefits of paying subselectronically.
1. Everyone gets paid faster
Most construction companies are still paying by paperchecks. These take a long time to get from the payer to the payee. Whenpayments are sent out by mail, it can take three to five days for a check toarrive, depending on how far it has to travel. And there’s also a chance thatthe check could be lost forever, stuck in a postal system machine somewhere, orsent to the wrong address.
With electronic payments the transfer may take one to twobusiness days at most, and is often almost instantaneous. No more waiting bythe mailbox for money.
2. Takes less time to process payments
The process of creating payments and printing checks cantake an enormous amount of time on its own. First, the checks must be printedand prepared for signature. Then a check signer must sign them, but this cantake a while, depending on how often the signer is in the office. Checks maysit for a day or two waiting for signature. Then the checks are prepared formail and sent out. Depending on the efficiency of the system, it can take hoursor days for this to happen.
Electronic payments allow you to send money with just aclick: no processing, no paperwork, no fuss. It can take minutes to send anelectronic payment, instead of days.
3. Easily get proof of payment
If a sub claims that they haven’t been paid, the only proofof payment is a canceled check. It can take days or weeks for the canceledcheck to show up online, so there’s no way to know if the payment arrived ornot. You can assure your sub that you’ve paid them, but there’s no proof.Usually, you end up canceling the check you sent and reissuing payment, whichmeans the sub has to wait for another check in the mail.
With electronic payments your bank records will show thetransfer almost immediately, or within a couple of days. This proves to you andthe sub that payment was made.
4. Get paperwork easier and faster
If you need an insurance certificate or a lienwaiver signed before you can pay your subcontractor, holding back paymentis often the best way to ensure you receive those documents. When checks takedays or weeks to arrive, there isn’t much motivation for the sub to quicklyturn around compliance requests. But when subs know they will receive theirmoney right away, they’re more likely to comply in a timely fashion.
Electronic payments make enticing your subs to completetheir paperwork faster and easier. When they know they’ll get paid quickly,they’re more likely to respond in a timely manner.
5. Less chance of fraud
Checks can be stolen or removed from the mail and be forged.There’s no way to prevent the possibility that your check might be used in afraudulent manner. With electronic payments you can be secure knowing that themoney is going into the account it’s supposed to. It can’t be hijacked or stolenbetween banks.
Electronic payments are a secure way to pay yoursubcontractors, reducing the chance that checks are stolen or usedfraudulently.
6. Less expensive
When you consider that electronic payments are almost alwaysfree or very inexpensive to make, paying by check starts to appear expensive.You save printing costs for checks, postage, and time spent processing them. Bypaying with electronic payments, no supplies are needed, and they can be made injust a few minutes.
The savings you’ll gain from using electronic payments makesthem a great option to help cut overhead expenses. The time you save will allowyou to spend more time on your business and getting work, rather thanadministrative tasks.
Electronic payments get everyone paid faster, take less timeto process, provide instant proof of payment, allow you to get paperwork donefaster, create less chance for fraud, and are less expensive to process. If youaren’t using electronic payments to pay your subcontractors, you’re costingyourself valuable time that could be spent working on your business andincreasing profits. Theo Build can help you process your payments quickly andsecurely, saving you time and money.