Every year, Rabbet releases our Construction Payments Report which shares insights into the growing costs from slow payments in the U.S. Construction Industry.
The 2023 report reinforces how critical it is for the industry as a whole to prioritize faster and more reliable payments. Speeding up payments to contractors and making the process more reliable could cut project costs, reduce project risk, and better protect a project’s timeline.
In this insightful overview, we’ll help you understand why this report is essential for anyone involved in the U.S. construction industry. Whether you’re a developer, lender, or simply passionate about the field, this report is your key to unlocking the challenges and opportunities in construction finance.
- Urgency for Addressing Slow Payments:
The report underscores the pressing need for CRE developers and construction lenders to recognize the urgency of addressing slow payments, with a staggering $273 billion at stake.
- The Need for Swift Payments:
In the construction industry, time is money. Our report highlights the critical importance of prioritizing faster, more reliable payments. Faster payments can make or break a project, directly influencing factors like time, budget, costs, and quality.
- Incentives for Developers to Speed up Payment:
Get insights into the contractor’s perspective. A remarkable 87% are open to offering discounts for faster payments, with 26% willing to go the extra mile with discounts exceeding 10%. This section dives into the financial implications of payment certainty.
We’ll walk you through the concerning trend of increasing payment delays. In 2023, 72% of contractors reported delays longer than 30 days, compared to 49% in 2022. Learn how this impacts all stakeholders in the industry.
Slow payments result in project delays and increased lien filings. The number of liens filed in 2023 surged by 141% compared to the previous year, highlighting the urgency for timely payments.
- Reserve Capital Depletion:
Discover how general contractors and subcontractors are using business and personal savings more than ever. The reliance on retirement savings has doubled from the previous year, a trend that points to tighter credit macro conditions.
- Identifying Project Delays:
Uncover the top contributors to project delays, as identified by general contractors. The complexity of payment systems and financial processes is a significant challenge that demands industry-wide solutions.
- Contributors to Slow Payments:
Learn why developers and lenders play a major role in slowing down payments and how this impacts project feasibility, schedule, costs, and quality. In 2023, slow payments were 17% more expensive than in 2022.
See how both subcontractors and general contractors are adapting their strategies, focusing on different asset types. Healthcare and science facilities, warehouses, and industrial projects have gained prominence.
In the ever-evolving construction industry, staying informed and proactive is the key to success. The 2023 Construction Payments Report is your guide to understanding the challenges and opportunities in construction finance. Download your copy now to gain valuable insights that can shape the future of your construction projects.
Rabbet’s Solution
As we highlighted in this report and in our Annual State of Construction Finance Report, this industry is plagued with outdated and disjointed processes that make it hard for parties to track and collect payments in a timely manner. A proactive choice to speed up payments can result in savings and boost the overall success of a project.
Rabbet continues to transform the construction finance industry with intelligent solutions that can accelerate payment processes and optimize workflows, enabling your teams to focus on critical business instead of time-consuming administrative tasks and sifting through unorganized project data. If your team is at risk of overspending on your projects because of slow payments, schedule a meeting today.
