7 Effective Ways to Simplify Construction Payment Management

The old-school approach to construction payment management creates unnecessary headaches for everyone involved. Contractors have to juggle invoices from subcontractors and suppliers. Lenders face increased risks of cash mismanagement.

Title agents are inundated with forms and payment requests. 

No matter which role you play in construction payment processes, you’ve probably thought to yourself, “There has to be a simpler option.” There is. Here’s how to make payment management more efficient:  

1. Stop Filling Out So Many Forms

Think about all of the paperwork that you complete manually when requesting or sending construction payments. There are more productive ways to use that time. While it’s vital to justify any disbursement, the old-school approach increases the risk of errors and creates headaches for contractors.  

LMS Project drastically reduces the amount of paperwork associated with construction payment management. Contractors can create and submit the forms required for construction payouts via a centralized portal. This transition saves time and keeps everyone on the same page while also reducing the risk of errors.  

2. Automate Construction Disbursements

Manual disbursement processes can be time-consuming and error-prone. General contractors are often forced to juggle invoices from suppliers and subcontractors while they await payment. 

Automation ensures that payments are released promptly based on predefined conditions. Contractors will benefit from more consistent cash flow. Lenders and title agents will reduce their administrative burdens without increasing the risk of cash mismanagement. 

Automating the construction disbursement schedule also promotes transparency and payment tracking. At a glance, lenders can review draws and verify that the project is still on budget.  

3. Centralize Budget Tracking and Management

Tracking budgets using different email threads and local file folders is a recipe for disaster. Every contractor has a preferred communication channel, which may include email, fax, or SMS messages. If you are managing multiple projects, there is a high risk of miscommunication and lost documents.   

Implementing a centralized portal keeps all budget information and forms in one place. Title agents and financial institutions can track expenses and outstanding invoices in real-time. They can use this information to guard against overspending and complete the project on time.  

4. Simplify Lien Release

Lien releases are essential for protecting the interests of property owners and lenders. However, manually collecting and managing them can be tedious for title agents. Contractors also find lien releases tedious, as even minor errors can lead to payment delays and disrupted cash flow. 

Digitizing lien release form submissions and processing is one of the best ways to simplify construction payment management. Submitting digital lien releases saves contractors time and helps reduce the risk of payment delays. 

Leading solutions not only facilitate digital lien releases but also automate document processing. As soon as a contractor submits a lien release request form, the platform will process the forms and arrange for payment disbursement.  

5. Adopt a User-Friendly Portal

A centralized, user-friendly portal makes it easier for contractors, lenders, and title companies to access critical information. These solutions reduce the risk of miscommunication and help keep important documents organized. The result is a more efficient payment process for contractors and improved compliance for lenders

6. Send Electronic Payments

Construction businesses don’t want to wait days or weeks to receive disbursements. They need to get paid as soon as possible to protect their cash flow. 

Ditching checks for electronic payments means less work for title agents and less stress for contractors. LMS Project speeds up your payment processes with our automated workflows.  

As soon as a contractor submits lien release forms, our platform will review the documents and confirm that they are correct. LMS Project initiates electronic payments within 24 hours of receiving the request. 

7. Simplify 1099 Reporting

Compliance with tax regulations and financial reporting requirements represents a persistent challenge in construction finance. Suppliers, subcontractors, and general contractors typically need to receive 1099 forms for tax reporting purposes.  

A digital construction payment management platform automates the generation of 1099 forms. Lenders and general contractors can track who is required to receive a 1099 form and ensure those documents are delivered in accordance with state and federal tax law.  

Addressing compliance concerns via automation reduces the administrative burden of construction payment management.  

Modernize Construction Payment Management With LMS Project

Simplifying construction payment management benefits contractors, lenders, and title agents. LMS Project includes all of the tools needed to modernize your construction payment processes. The

platform provides you with the following features: 

• Automated disbursements 

• Centralized budget tracking 

• Lien release collection 

• Branded portal 

• Flexible payment options 

• Compliance tools 

Want to learn more about LMS Project and our customizable payment management solutions? Schedule a demo today.