Virtual Payments and Lien Tracking in the Construction Environment
Construction companies not only work on a project basis, they have to track and report to owners, shareholders and stakeholders both by project and in the aggregate. In addition to that, reports have to go to Banks and other financing sources. There is also project by project tracking necessary for liens as many sub-trades lien all work as a matter of how they do business. When special conditions in multiple contracts are inserted the General Contractor on his behalf or on behalf of the ownership or financing group has to track variously:
- Lien Waivers
- Lien Amounts
- Lien Payments Against Total
- Lien Discharges
On larger jobs this is a significant administrative job that must be done correctly. The paperwork needs to be clear and easy to read, timely and on point by State.
The question we have gotten from two significant Contractors has been “will the virtual card system affect our lien tracking?” And the answer, of course, has been “it depends”.
We have found contractors tracking their liens in two main ways. The first for our larger General Contractors is in the main accounting system which, built for General Contractors, has a built in module for exactly this functionality. Where this is built into the system then lien tracking is not affected at all.
The virtual card acts as a payment mode similar to a check or an EFT. The payment is therefore downstream of the tracking software and nothing is changed. There still is one advantage however. The Virtual Card reports to the second when the sent payment is cashed by the Vendor and that amount, time and place are automatically recorded in the system and can be seen real-time and on-screen. It will be possible to have instant third party corroboration on all of these payments including who has not cashed their payments. The Virtual Card in this case, with Banking level security and reporting, would seem to be the superior payment method. That is particularly true where you have a bulldog at the Bank or the Owners office all over you on these items.
The second method appears to be in use among older contracting systems where lien payments, lien waivers and lien releases are tracked manually by the GC’s at point of payment. We have sympathy for those clerks!
But, again, if that is the current system and you want to maintain it, a virtual card payment is functionally identical to a check payment or an EFT. At the client side nothing needs to change and whatever manual or separate semi-manual system you are using can be maintained “as is”.
If you are looking for change in this situation we would recommend that a combined Cloud Lien Tracking platform be integrated with our Cloud Virtual Payments. We would be able to pass payment information electronically to the Lien Payments module, and on confirmation reports being run we will be able in the very near future to have automatic upload of those cleared payments passed automatically to the lien tracking system. This would provide for detailed reporting in that system accurate daily. In these days of a shortage of skilled and knowledgeable construction workers the employee can be transferred to other contract work of higher value.
It may not come as a surprise that we have already identified the way to accomplish this and have selected a Lien Vendor group who would love to meet you (and is affordable). After a reasonable integration cost (done within 30 days) all you have is the normal monthly subscription with unlimited Lien management. Easy, fast, affordable and state of the art.
In both cases the value proposition remains powerful. More detailed and current reporting; higher levels of online security and information tracking and of course a very nice bonus of getting paid to remit the accounts payable spend.
In addition to that, we now have a single payment system that means we could handle Check, EFT and virtual cards for every payment for your company.
If you have further questions please contact us and we would be pleased to answer them for you.