Contactor Payment

Discussion in 'Accounting Software' started by msgtdixon@gmail.com, Mar 5, 2009.

  1. Guest

    Construction Companies Unite for Payment
    Under the current system sub-contractors submit an invoice to the
    general contractor. The general contractor submits an invoice (with a
    marginal mark-up) to the project owner. The project owner presents the
    invoice to the financial institution responsible for funding the
    project. The financial institution=92s appraiser visits the project
    site, to ensure the work completed matches the invoice(s) presented.
    Upon the appraiser=92s approval the general contractor is paid for
    invoice(s) submitted. By Ohio law the general contractor is directed
    to pay the sub-contractors within ten days from receipt of draw.

    Challenge:

    The sub-contractor end up carrying the cost of material and labor for
    a minimum of sixty days (if everything goes according to plan). It is
    more likely the sub-contractor will not receive any funds for one
    hundred and twenty days or more.

    The supply houses begin charging interest after thirty days.
    Employee=92s wages, taxes, equipment, and other bills have to be paid =96
    while the sub-contractor hasn=92t received any funds.

    In addition to the challenges outlined above =96 not all general
    contractor=92s pay the sub-contractors in the time frame allotted by
    Ohio law.

    One suggestion:

    I believe some of the current time delay in receipt of payment could
    be improved if -- the financial institution financing the project
    placed the funds in a 'contruction trust fund'. Draws would be
    submitted in the same manner outlined above. However, upon the
    appraiser's approval the financial institution would be responsible
    for issuing a check for each invoice, the checks would be given to the
    general contractor -- the general contractor would be responsible for
    ensuring the checks were distributed and obtaining the appropriate
    lien waivers. The general contractor would not receive their draw from
    the financial institution until submitting the notorized lien waivers
    from the various sub-contractors.

    If each construction company owner/president/stockholder in America
    would contact their elected officials -- we can change the current
    system.

    http://www.usa.gov/Contact/Elected.shtml
    http://www.usa.gov/Contact/Governors.shtml
    http://www.ncsl.org/public/leglinks.cfm
    Posted by Contractor Payment at 9:46 AM 0 comments
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    , Mar 5, 2009
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  2. Accountants CPA Hartford

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    Change in Law

    Great post. I agree. I'll contact mine. Thanks for the alert.
     
    Accountants CPA Hartford, Sep 20, 2009
    #2
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