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If a GC has sent you a ConsensusDocs 751 Standard Short Form Agreement Between Constructor and Subcontractor, you will want to know what it says about getting paid. Many GCs will revise standard contract terms, so be sure to read your specific contract carefully before signing it. We’re going to save you some time, though, by translating the “contract-ese” into plain English. Table of Contents ConsensusDocs 751: A Short Form Alternative The 751 is…
ConsensusDocs are standard construction documents put together by a team of people in the industry representing all facets of a project, from design to contracting to ownership. The documents are supposed to be more neutral than other standard documents provided by other organizations. Here we’ll look at the payment clauses from the ConsensusDocs 750 Standard Agreement Between Constructor and Subcontractor. Schedule of Values 8.1 Schedule of Values – “As a condition precedent to payment,…
When cash flow becomes a problem, you need options to help get cash coming in. It doesn’t matter how much you invoice, it’s the lack of payments that’s the issue! Bank loans, lines of credit, and credit cards are some options you can consider. But they can take a long time to process, require a credit check, and often require collateral. Construction invoice factoring might be the solution you’re looking for. We’ll look at what…
Getting paid in construction can take a long time. It isn’t unusual for payments to take 60 days or more. When cash isn’t flowing into your construction business as quickly as you need it to, many contractors look at their accounts receivable. They’ll try to figure out how to get their customers to pay faster. If you need to improve your cash flow – and are willing to pay for it – a factoring or…
Ever read the payment clause in the AIA A401 Standard Form of Agreement Between Contractor and Subcontractor? Understand any of it? We feel your pain. Here’s a deep dive into the progress payments portion of that clause, with an interpretation in regular English and some suggestions for changes that may help you get paid faster. Table of Contents American Institute of Architects contracts The American Institute of Architects produces some of the most widely used…
The American Institute of Architects produces some of the most commonly used contract documents for construction projects. If you are a subcontractor on a project using the AIA A401 Standard Form of Agreement Between Contractor and Subcontractor, you may wonder what the clauses about final payments mean. When do you have to submit your final payment application? When do you get your retainage? Can you make any changes to the contract to get paid faster?…
There are four basic reports that make up the core financial statements of a construction company: Balance Sheet, Income Statement (or Profit and Loss Statement), Cash Flow Report, and Work-in-Progress (WIP) report. We’ll take you through each of them and describe what they mean – and how they can help contractors improve access to credit, bonding capacity, and cash flow overall. Unless you’re an accounting or money geek, the thought of reviewing these reports may…
The construction industry has one of the highest rates of failure of any industry. In part, that is because cash flow in construction can be so difficult to maintain. Getting paid in construction can take a long time, and if you aren’t properly managing where your money comes from and goes – and how long it takes to move – you won’t survive. It’s important that you review critical reports on a regular basis…
Where your construction company’s money comes from, and where it goes is called cash flow. Cash flow is valuable information for all business owners, especially for construction businesses. An accurate cash flow projection gives you the knowledge to better predict your cash needs months in advance. In turn, this can help your construction business grow and show you when a problem is coming on the horizon. Cash flow can be a significant problem for construction…
Virtually every state has prompt payment laws that make it illegal for anyone on a construction project to delay payments to their contractors and suppliers. Does that mean the police are going to show up at the GC’s door if they don’t pay you fast enough? Well, no. It doesn’t work quite that way. But the law does give you protection, and actions you can take to speed up payment. Not only that, the laws…