How to tackle construction payment management: Insight from top general contractors

December 21, 2021 | 5 minute read
Rick Bell
Senior Content Marketing Manager
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It wasn’t that long ago that a field accountant for a leading general contractor found herself driving around for an entire weekend with a $500,000 check stashed in the visor of her car simply because a subcontractor failed to pick up the financial disbursement before the close of business.

The image of hundreds of thousands of dollars tooling around for two days in an employee’s car would likely cause the most unflinching CFO to cringe.

With paper-based transactions as a standard operating procedure among some companies in the construction industry, there’s little surprise that such casual practices still exist today.

Automate payment management

The fact is that this risk-filled scenario is completely avoidable.

Automated payment management solutions make such perilous practices obsolete while building lasting partnerships between general contractors and subcontractors.

It also streamlines the process for construction companies of all sizes to assure that everyone is paid fairly and on time.

A recent panel discussion featured three experts from top general contractors who shared their keen insights regarding the benefits of using a collaborative payment platform.

Construction payment management solutions such as Oracle’s Textura Payment Management play a vital role in solidifying relationships while eliminating the need for wasteful manual billing and payment practices.

The thought-provoking conversation was led by Mike Antis, global vice president of Oracle Textura Payment Management, and featured Sonja Lee, controller for Sterling Construction Inc.; Tom Borgia, chief financial officer/partner of J. Raymond Construction Corp.; and Matt Gorske, project controls director at Barton Malow Company.

Build lasting partnerships

The evolution of the general contractor-subcontractor relationship was a recurring theme among the panelists. They credited Oracle Textura for helping them turn a transactional, almost adversarial relationship into a much deeper, collaborative partnership.

Previously there was a different attitude toward paying subcontractors. Now it’s crucial to get subcontractors paid as quickly as possible. J. Raymond implemented Oracle Textura in 2015 in part to build internal efficiencies while also recognizing that the company is only as good as its subcontractors and suppliers.

“It’s all about the relationships we maintain with our subcontractors,” says Borgia.

“If we have a subcontractor who has an immediate cash flow need or help getting one of their suppliers paid, we can get them money immediately via ACH. If we can move the money quickly to our subs and suppliers, we want to be a good partner.”

Additionally, Borgia says, if there’s something J. Raymond needs from a subcontractor or supplier, they’ve built that relationship and the sub is more apt to reciprocate.

“It’s really about relationships at the end of the day, and Oracle Textura provides us the ability to cultivate that relationship."

Tom Borgia, CFO/Partner, J. Raymond Construction Corp.

Lee agreed, and as a small, relatively new general contractor in the Boston area, collaboration is vital to Sterling’s booming growth.

“It’s all about the relationships,” Lee says. “It’s a two-way street with subs and general contractors. That’s all you have at the end.”

She adds that Oracle Textura construction payment management software improved what was a tenuous payment process into a no-brainer.

“During COVID, I sent two very large check runs that never got to our subs. That was a nightmare. With Oracle Textura, I never have to worry about that again.”

Barton Malow and Oracle Textura maintain a lasting relationship because of their partnership, which began in early 2019, says Gorske. Partnership is a core value at Barton Malow, Gorske adds.

“We just hit it off because it’s the way we operate,” he says. “We partner with our clients and subcontractors and build a relationship. And that was evident from day one from the Oracle Textura integration team.”

Gorske also is effusive regarding Oracle Textura’s framework for developing positive relationships between the general contractor and its subs.

“It’s been proven: When cash is flowing, when the trades are being paid fairly, projects have a much higher likelihood of finishing on time and budget,” he says.

“During COVID, I sent two very large check runs that never got to our subs. That was a nightmare. With Oracle Textura, I never have to worry about that again.”

-Sonja Lee, Controller, Sterling Construction Inc.

Go all-in with implementation

Lee says that there was an initial concern that as a small company, their subcontractors would be resistant to automated payment and billing.

Despite many of their subcontractors being mom and pop shops—and to her delight—many of their subs already were using Oracle Textura or had used it in the past.

For those considering the move from manual to automated, Lee has one piece of advice:

“Go all-in,” she says, adding that when they implemented Oracle Textura a year ago, some jobs remained on a manual system.

“It’s confusing to have some on and some not, and quite frankly, it showed us that the way we were doing it was much more inefficient than the way we do it now. I would never do that again. I would switch them all 100 percent.”

Fees and subcontractors

General contractors considering the move to automation will voice their concerns regarding charging subcontractor fees to use Oracle Textura, and there can be questions about the acceptance of those fees.

Communication and transparency are keys to explaining why, Borgia says.

Let the subcontractors know the cost upfront and that there is no competitive disadvantage between the subcontractors. He adds that once they are on board, they will see the positives of automation and buy in based on the efficiency of the process.

“We have not lost a subcontractor or a client based on using this solution,” Borgia says. “If you communicate the goals and expectations, everybody will understand the process and work together to make it work.”

Lee adds that Sterling put the Oracle Textura fees into their PSAs so the subcontractors would know upfront and to include the fee as part of their bid.

Sterling will fold it into their bid to their clients, she says.

“We’ve never had an owner reject the fee or ask what it is,” she says.

Antis adds that Oracle Textura customers don’t lose ground or are not winning business because of the fees the Oracle tool brings to the table.

“The reality is, all three of your organizations are using Oracle Textura because there’s a positive ROI. If you’re able to recover the fees from your owner, that’s just gravy on the potatoes.”

Watch the webinar here.

Oracle Construction and Engineering, the global leader in construction management software and project portfolio management solutions, helps you connect your teams, processes, and data across the project and asset lifecycle. Drive efficiency and control in project delivery with proven solutions for project controls, construction scheduling, portfolio management, BIM/CDE, construction payment management, and more.

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