60-Hour Payment Woes: How Builders Waste Time Chasing Funds
- Cost Construction Accounting
- 1 hour ago
- 6 min read
Your crew finished the job three weeks ago. The invoice went out two weeks ago. And you're still waiting to get paid. Sound familiar?
Construction firms waste over 60 hours every month nearly two full work weeks, just managing payments. That's one employee doing nothing but chasing invoices, resolving disputes, and reconciling accounts instead of building, bidding, or growing your business.
And it's getting worse. According to industry data, payment delays in construction have increased 23% since 2020, creating a cash flow crisis that's forcing profitable companies to take out loans, delay payroll, or even close their doors.
Every hour spent managing payments is an hour you're not making money. This article breaks down exactly where those 60 hours disappear, what it's costing you in real dollars, and the proven strategies top contractors use to cut payment admin time by 70% or more.
Why Construction Gets Hit Harder Than Other Industries
The Multi-Party Payment Web
Unlike retail where a customer pays and you're done, or manufacturing where you invoice and get paid in 30 days, construction involves a complex chain of parties. The owner pays the general contractor, who pays subcontractors, who pay suppliers and everyone deals with retention, lien waivers, and compliance documents along the way.
One delay anywhere in this chain creates a domino effect that impacts everyone downstream. When the owner holds payment for 15 extra days, it doesn't just affect the GC. It means the GC delays paying subs, who then delay paying suppliers, who may need to slow down deliveries to other projects.
Contract Complexity Breeds Disputes
Construction projects aren't static. You're constantly dealing with change orders that modify scope and price, schedule adjustments that shift payment timelines, compliance requirements that hold up invoicing, and material cost fluctuations that trigger contract reviews.
A survey of 500 contractors found that 67% experience at least one payment dispute per project, with each dispute adding 8-12 hours of administrative work. These aren't small disagreements either, they range from missing documentation to fundamental disagreements about scope changes worth tens of thousands of dollars.
No Industry Payment Standards
Every client has different invoice formatting requirements, payment terms (Net 30, Net 60, or "whenever we feel like it"), documentation needs, and approval processes. This lack of standardization forces your team to customize every invoice and follow unique procedures for each client multiplying administrative burden exponentially as you take on more projects.
Where Your 60 Hours Actually Go: The Payment Management Breakdown
Invoice Creation: 15 Hours Monthly
Creating a compliant construction invoice isn't like sending a retail receipt. You're gathering proof of work completed, collecting time sheets from multiple crews, documenting materials used, calculating labor costs with equipment charges and markups, then pulling data from field reports, photos, and delivery receipts.
The real inefficiency? Most contractors pull information from 5-8 different sources spreadsheets, paper forms, emails, photos then manually compile everything into invoices. A single invoice for a complex project can take 2-3 hours to prepare when you're hunting for documentation and verifying quantities.
Follow-Up & Collections: 20 Hours Monthly
Here's the typical cycle: You send an invoice, wait 7-10 days, then call to confirm receipt. A week later, you email to request payment status. When the payment deadline passes, you follow up again. Then you escalate to a decision-maker. And you repeat this process for every overdue invoice in your system.
Why does this take so long? Without automated tracking, your team doesn't know which invoices are overdue until they manually check. Then they spend hours playing phone tag and sending "just checking in" emails. For a contractor managing 15-20 active projects, this becomes a full-time job.
Dispute Resolution: 12 Hours Monthly
Common disputes sound like this: "We never received this invoice." "The scope changed, so the price should be different." "These quantities don't match our records." "We're missing lien waivers from your subs."
The hidden cost extends beyond the 12 hours spent resolving disputes. You're also dealing with delayed cash flow that impacts your ability to pay your own team and suppliers. Some disputes drag on for weeks or months, requiring legal review and consuming even more resources.
Reconciliation & Record-Keeping: 13 Hours Monthly
Reconciliation means matching payments received to invoices sent, recording partial payments and retention holdbacks, updating project accounting, tracking remaining balances, and preparing reports for stakeholders. It's meticulous work that requires attention to detail.
The error cascade is real: Manual reconciliation leads to mistakes. Mistakes trigger audits. Audits consume even more time and sometimes require expensive outside help to untangle what should have been straightforward bookkeeping.
The Real Financial Impact: Beyond Wasted Hours
Let's do the math on a mid-sized contractor:
Labor cost alone:
60 hours × $35/hour (loaded administrative rate) = $2,100 per month
Annual cost: $25,200Â in pure administrative overhead
That doesn't include:
Late payment fees you can't collect
Financing costs when you need bridge loans
Lost early payment discounts from your suppliers
Opportunity Costs
What could your team do with 60 extra hours monthly?
Bid on 3-5 additional projects
Strengthen client relationships through proactive communication
Improve project planning and coordination
Invest in business development
Conservative estimate:Â If one additional bid per month converts at your typical margins, you're looking at $50,000-$150,000+ in annual revenue opportunity cost.
Project Timeline Disruptions
When payments are delayed:
You delay paying subcontractors → They slow down or stop work
Work stoppages push completion dates → You face liquidated damages
Reputation suffers → Future bids become harder to win
Case example:Â A commercial GC in Texas calculated that payment delays on one $2M project created a cascade effect costing $87,000 in extended overhead, penalties, and relationship damage.
How Top Contractors Are Solving the Payment Crisis
Digital Tools That Eliminate 70% of Admin Work
Modern construction payment platforms automate the entire cycle:
Automated invoice generation:
Pull data directly from project management systems
Auto-calculate costs based on approved rates
Generate compliant invoices in minutes, not hours
Real-time payment tracking:
See exactly which invoices are outstanding
Get automatic reminders when payments are due
Track payment status without making calls
Integrated lien waiver management:
Collect waivers electronically
Track compliance automatically
Eliminate paper chasing
Cloud-based collaboration:
All stakeholders see the same information
Reduce "I never got that" disputes by 90%
Instant visibility into payment status
AI-powered insights:
Predict which clients will pay late
Optimize payment terms based on historical data
Identify patterns that lead to disputes
Implementation Strategy: From Chaos to Control
1. Audit Your Current Process (Week 1)
Track where time actually goes:
Have your team log payment-related activities for one week
Identify the top 3 time-wasting bottlenecks
Calculate the true cost in dollars
2. Choose the Right Tools (Weeks 2-3)
What to look for:
Integration with your existing accounting software (QuickBooks, Sage, JobTread)
Mobile access for field teams
Compliance features specific to construction (lien waivers, retention tracking)
Scalability as you grow
Get team input:Â Your AP/AR staff and project managers will use these tools daily. Their buy-in is critical.
3. Pilot Program (Months 1-2)
Start small:
Select 2-3 projects to pilot the new system
Train the core team thoroughly
Document what works and what needs adjustment
Measure results:
Time spent on payment admin before vs. after
Number of payment disputes
Days to payment (cycle time)
Team satisfaction scores
4. Scale Across the Business (Months 3-6)
Roll out systematically:
Add projects in waves, not all at once
Provide ongoing training and support
Celebrate wins to build momentum
Leverage advanced features:
Set up automated payment reminders
Use analytics to optimize payment terms
Implement early payment discount programs
Take Action: Reclaim Your 60 Hours
Those 60 monthly hours aren't just an inconvenience, they're costing you $25,000+ annually in direct costs and $100,000+ in lost opportunities. But here's the good news: you don't have to accept this as "just how construction works."
Start by tracking your team's payment management time for one week. Calculate the real cost. Then research automation platforms built specifically for construction workflows and pilot one on your next project.
The construction companies thriving today aren't just good builders, they're good businesses. They've eliminated the administrative drag and freed up resources to focus on what actually makes money: delivering exceptional projects on time and on budget.
The question isn't whether you can afford to modernize. It's whether you can afford not to.
Want to see how much time and money your company is losing to payment inefficiencies?Â
Construction Cost Accounting offers a free payment workflow assessment that identifies your biggest bottlenecks and quantifies the opportunity for improvement.
