The True Cost of Writing Paper ChecksIn this digital world, issuing paper checks is seen by most industries as antiquated, slow, dangerous, and expensive. However, in the notoriously slow-to-adapt construction industry it is still very much the norm. It’s simply how business is done in this industry – and in many General Contractors’ eyes, the old adage: “if it ain’t broke, don’t fix it” certainly applies. To many GCs the system seems inexpensive, and it’s just how business is done.
But are paper checks actually inexpensive? GCs may be surprised to hear the true (and hidden) costs of writing check within their construction business. According to Bank of America a paper check can cost businesses anywhere from $4 to $20 per check. A study by the Aberdeen Group put the average cost of a check at $7.78 per check after factoring the cost of wages, materials, check-running, postage, and more. Considering the average residential construction process involves the writing of 90-100 checks, that’s over $700 per project – just to write checks! Digitize your payments process and spend just $150 per project on payments – and your first 2 projects are free of charge!
Is sending paper checks costing you more than money up front? One of the greatest challenges GCs face is maintaining good relationships with Subcontractors. Losing a Subcontractor at the last minute or getting pushed back due to scheduling conflicts results in project delays. Staying at the top of your Subs’ list starts with not only paying them on time, but offering multiple payment options, such as same or next day ACH. Digitizing payments and offering multiple options is truly the easiest way to be your Subs’ favorite Builder to work with.
“But checks are time-tested and secure! All my Subs want checks!”. According to the Association for Financial Professionals (AFP) check fraud is still the number one fraud threat facing businesses. And with the number of checks written in the construction industry, this can be a major threat to your business. Stories of checks being taped to the inside of walls for Subcontractors to pick up are not uncommon and should send shivers down the spine of GCs. A single fraudulent check could cost your business thousands in lost revenue and legal fees. Eliminate the risk of check fraud before it happens by digitizing your payments!
Check fraud is not the only threat to your business. Many GCs don’t bother with lien waiver collection at all. A local GC once said: “Lien waivers are like flossing, you don’t think about it until it creates a massive problem”. Avoid unforeseen property liens quickly and easily through Sekady’s digital payments platform. A digital lien waiver signature is required before a Subcontractor or supplier can receive payment on a given project. The peace-of-mind that comes with this additional layer of protection can certainly help you sleep better at night.
GCs on the Sekady payments platform are saving up to 3 full days of invoicing work per month. This is yet another way GCs can improve efficiency and save labor costs and headaches in the payments process. GCs can completely avoid that end of month chaos that ensues when it’s time to collect, organize, approve, and pay out their invoices. There’s no time like the present to streamline your payment workflows.
The Bottom Line
In a tough market and uncertain times, GCs need to invest now in ways to reduce overhead costs and increase efficiencies while maintaining good relationships with their Subcontractors. Protecting their business from threats in the form of security risks, and in the form of hidden costs will help them thrive in volatile times.
Request a demo of Sekady’s powerful payments platform today and see how leveraging technology can save you time, money, and headaches.