Many general contractors spend hours each week printing checks and other documents to pay their subcontractors (subs). What if there was a faster way to process payments and save the company money at the same time? The answer is electronic payments. They are faster, cheaper, and more secure than mailing checks. We’ve put together a list of six benefits of paying subs electronically.
1. Everyone Receives Paychecks Sooner
Most construction companies are still paying by paper-checks. These take a long time to get from the payer to the payee. When sending payments out by mail, the check typically takes three to five days to arrive, depending on its destination’s distance.
With electronic payments the transfer may take one to two business days at most, and is often almost instantaneous. No more waiting by the mailbox for money.
2. Cutting Down on Processing Payments
The process of creating payments and printing checks can take an enormous amount of time on its own. First, the checks must be printed and prepared for signature. Then a check signer must sign them -and depending on how often the signer is in the office, this can take a day or two. Finally, the checks are prepared for mail and sent out. Depending on the efficiency of the system, it can take hours or days for this to happen.
With Electronic payments, all of this can happen with just a click: no processing, no paperwork, no fuss. It can take minutes to send an electronic payment, instead of days.
3. Easily Get Proof of Payment
If a sub claims they haven’t received payment, the only evidence of payment available is a canceled check. It can take days or weeks for the canceled check to show up online, so there’s no way to know if the payment arrived or not. You can assure your sub that you’ve paid them, but there’s no real proof. In this situation, you must cancel the check you sent and reissue payment, which means the sub has to wait for another check in the mail.
With electronic payments your bank records will show the transfer almost immediately, or within a couple of days. If the sub claims they haven’t been paid, having a canceled check is like the ultimate proof that payment was made. So, both you and the sub can be sure that the payment was done!
4. No More Preliminary Paperwork Delaying Payments
If you need an insurance certificate or a lien waiver signed before you can pay your subcontractor, holding back payments often is the best way to ensure you receive those documents. When checks take days or weeks to arrive, there isn’t much motivation for the sub to quickly turn around compliance requests. However, when subs know they will receive their money right away, they’re more likely to comply in a timely fashion.
Electronic payments make enticing your subs to complete their paperwork faster and easier. From here it’s like a chain reaction: when they know they’ll get paid quickly, subcontractors are more likely to respond in a timely manner.
5. Stolen Checks Are A Problem Of The Past
With tangible checks, there’s always potential for theft. If this were to happen, there’s a real risk of the check being used for fraudulent purposes, and no foolproof way to prevent it.
Electronic payments provide peace of mind because they securely direct the money into the intended account – making it virtually impossible for anyone to hijack or steal funds during the transfer between banks.
Electronic payments are a secure way to pay your subcontractors, reducing the chance that checks are stolen or used fraudulently.
6. Overall More Cost Efficient
When you consider that electronic payments are almost always free or very inexpensive to make, paying by check starts to appear expensive. You save printing costs for checks, postage, and time spent processing them. By paying with electronic payments, no supplies are needed, and they can be made in just a few minutes.
The savings you’ll gain from using electronic payments makes them a great option to help cut overhead expenses. The time you save will allow you to spend more time on your business and getting work, rather than administrative tasks.
Electronic payments help everyone be paid faster, reduce processing time, provide instant proof of payment, allow you to get paperwork done faster, create less chance for fraud, and are less expensive to process. Use electronic payments for subcontractors to save time and increase profits. Don’t miss out!