Contactor Payment


M

msgtdixon

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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