A September survey from construction finance software firm Rabbet shows late financial payments cost the construction industry $208 billion in 2022, which is a 53% increase compared with $136 billion in 2021, according to constructiondive.com.
However, the report stated although the increase was large, it was typical considering the current economic climate, which is affected by inflation and interest rate increases.
The survey asked 137 general contractors and subcontractors in the U.S. about how they managed working capital, bidding decisions and project risks while facing slow payments during the past 12 months. Fifty-seven percent of respondents were general contractors, and 43% were subcontractors; about half of each group were small businesses worth under $5 million.
Thirty-seven percent of all respondents said late payments led to delays or work stoppages, and some contractors said they boosted their bids from 5% to 10% to help absorb costs.
According to the survey, 49% of subcontractors waited 30 days or more for their payments to come through, which basically was unchanged from 2021. Sixty-two percent of general contractors reported financial costs resulting from floating payments.
