Procore Pay: Introducing a Modern Approach to Construction Payments
UPDATED: September 4, 2023
The Launch
Today, getting paid is a paperwork nightmare that lacks visibility and takes place across disconnected systems. Over the past year, we’ve been working hard to automate and centralize the payments process so users have full transparency into the entire payments flow.
At Groundbreak 2022, we formally announced Procore Pay – the only payment solution built on the Procore platform that handles all aspects of the payment process between general contractors and subcontractors. A year later, at Groundbreak 2023, we proudly announced that Procore Pay is now officially available to select general contractors in the United States.
Procore Pay connects data from the Procore Project Management and Financial Management solutions, so users can easily access all of the information they need to make payment decisions in one place. Additionally, Procore streamlines every step of the payment process to help ensure everything is accurate and save valuable time for all involved.
Learn more at www.procore.com/pay
UPDATED: June 15, 2023
The Exchange
After the festivities conclude, it’s time to pay the piper—or the party vendors—for their hard work and services. It's essential these financial obligations are properly settled to maintain good relationships with the vendors and ensure your future parties are a hit.
Similarly, once all the items on the payment requirements checklist have been checked off, we should have everything necessary to confidently issue payment to the subcontractor for their contributions to the project. Let’s just put the check in the mail, right?
Not so fast. Automated Clearing House (ACH) is the preferred method of payment to protect against fraud and ensure a timely delivery of funds. The median days sales outstanding (DSO) in the construction industry is 90 days, therefore it’s crucial we do everything we can to expedite payment. As for fraud, a Kroll Global Fraud Report indicated that 75% of construction, engineering, and infrastructure companies have experienced a fraud incident in the past year and construction has the second-highest fraud incidence rate of any sector, after the retail industry.
ACH payments have a high level of security, especially when processed using encryption and secure servers. Checks are a less secure form of payment because they are manually sent as physical documents, which can be subject to alterations by bad actors. Plus, when a check payment is issued, the routing number and bank account number are disclosed to employees and check recipients.
In addition to ACH payment security, Procore Pay introduces two new role-based access control (RBAC) categories that both require Multi-Factor Authentication (MFA). In computer systems security, RBAC is an approach to restrict system access to authorized users while MFA helps ensure that those users are verified at login and when handling sensitive business activities.
Procore Pay also seamlessly facilitates the payment and lien waiver exchange between specialty and general contractors. Because this process takes place on the Procore platform, there are no additional systems to learn and adopt. When a subcontractor submits an invoice, they also submit an unconditional lien waiver for the current billing period. Procore then locks the signature on that waiver and releases it once payment is initiated to the subcontractor’s bank account on file. This approach effectively eliminates the post-payment lien waiver chase.
"We have a third party software that we use that works outside of Procore that manages our lien release process that costs us about $18k per year,” said Tiffanie Artigas, director of operational excellence at Verdex Construction. “That's going to be the first immediate savings that we're able to recognize and that's a big chunk of change."
Check back here for more updates on Procore Pay or have updates delivered to your inbox by joining the Procore Pay waitlist.
UPDATED: April 18, 2023
The Checklist
In continuing with our analogy, comparing the construction payment process to throwing a party, planning for any celebration will include a list of requirements such as decorations, hors d'oeuvres, and music. The best way to stay organized is creating a checklist to make sure we have everything we need. Otherwise, it’s easy to overlook something important and even easier to forget who volunteered to bring something. Staying organized is critical to successful execution.
Similarly, just as a party host creates a list of party needs and shares it with attendees, a general contractor shares a list of payment requirements with specialty contractors. Items on the checklist, such as an updated certificate of insurance, a conditional lien waiver, and other compliance documentation are critical for ensuring timely payment. By providing transparency and visibility to the appropriate project stakeholders, the checklist helps stakeholders understand what items have already been collected and what is still needed.
Some party planners may choose to take a more laid back approach, relying on past party experience or a simple request in the invitation to notify attendees of what they are responsible for bringing. Procore Pay takes a more proactive approach by leveraging the Payment Requirements Checklist, which provides both the general contractor and the specialty contractor visibility into all payment requirements at the commitment, invoice, and lien waiver levels. This convenient list view simplifies the collection of necessary documents and provides insight into the completion of key milestones necessary for a payment to be processed.
Invoice review starts and ends with the Payment Requirements Checklist, which can be configured to meet the needs of the general contractor and can also be used to administer a manual hold on a payment for any reason outside the preconfigured set of payment requirements. Items are checked off as they are completed until all requirements have been met for payment.
“We love the payment requirements checklist. Some of it is automatic, some of it is manual, and as the requirements are completed you see a green checkmark,” said Tiffanie Artigas, director of operational excellence at Verdex Construction. “It’s configured to our company’s needs and our specialty contractors can access that dashboard to easily see what's still outstanding. It saves us time fielding the same old questions because they can go look right there and see everything that we're waiting on.”
Check back here for more updates on Procore Pay or have updates delivered to your inbox by joining the Procore Pay waitlist.
UPDATED: March 22, 2023
The Invitation
In many ways, the construction payment process is similar to throwing a party, both pursuits require careful planning and the exchange of information through multiple stakeholders. Before the festivities can commence though, the host must get the word out, and that all starts with the invitation. While some may underestimate the importance of getting the invitation right, it's a critical first step that sets the tone for the entire event.
Just as a party host would create a guest list and send out save-the-dates, the general contractor starts the construction payment process by inviting the specialty contractor to request payment for work completed and materials supplied. Payment applications submitted by specialty contractors to the general contractor are an essential part of the construction payment process.
Today, many party planners might elect to use a digital service over sending out traditional paper invitations to better manage RSVPs, guest communication and event reminders. With Procore Pay, the invitation to submit a payment application can be initiated by the general contractor’s designated payment administrator on the Procore platform. Similar to a digital invitation, the general contractor’s invitation is delivered to the specialty contractor as a secure link sent via email. The specialty contractor is then prompted to log in to Procore or create a new Procore account if they haven’t done so already.
With their dedicated Procore account, the specialty contractor can then respond to multiple general contractors’ invitations from a single login. In addition to creating a better user experience, Procore can also provide specialty contractors a centralized hub to store necessary banking details and project information.
Using the Procore Invoice Management functionality included with Procore Pay, the general contractor can also administer and track invitations and payment applications more efficiently. Through the Procore platform, general contractors can ensure that payment applications are submitted on a regular schedule, reduce the risk of payment delays and provide specialty contractors with a familiar user interface.
“We’ve saved dozens of hours each month by submitting the correct invoice amounts the first time, and eliminating the need to do two or three rounds of revisions,” said Erik Feld, project manager and director of technical operations at TruEdge Builds.
Check back here for more updates on Procore Pay or have updates delivered to your inbox by joining the Procore Pay waitlist.
February 22, 2023
At last year’s Groundbreak conference, we unveiled Procore Pay, a new service launching in 2023 designed to solve one of the biggest financial pain points in construction— the payment process.
Throughout the construction project lifecycle, money moves through the value chain from the lender to the owner to the general contractor to specialty contractors, material suppliers, and field workers. There are few bigger blockers to taking on more work than dealing with the impact of a slow payment process.
This process is highly complex, with pencil requisitions, retainage, lien waivers, and other compliance documents all required before a single dollar can move. And even as dollars begin to move, the general contractor must continue to supply all the necessary documentation before they can submit their next payment application to the owner.
Construction is one of the slowest paying industries on earth, with a median time to pay across the industry of 83 days from when the invoice was sent. Additionally, according to the 2020 National Construction Payment Report, 80 percent of companies report spending a significant amount of time chasing down payments.
Procore Pay will deliver a modern approach to payments. It’s designed to help satisfy the unique needs of the construction industry, helping maintain healthier project cash flow and providing more sophisticated workflows such as joint checks and sub-tier waiver collection. And with safer payment application and review methods, Procore Pay can also help minimize the possibility of fraud.
“It would be incredibly impactful for the entire industry if we could just get to a place where there was real trust up and down that value chain. And I think a lot of the solution there is cultural, and possibly some of it is just in how we structure our contracts. But I do think technology can contribute to that solution and I’m really glad that [Procore] is working on it.”- Sarah Bush, Landis Construction
Other Procore customers have shared their excitement about:
- Reducing payment friction by expediting invoice review and compliance document collection.
- Saving time by removing a separate payment solution from the technology stack and the associated duplicate data entry or integration maintenance.
- Streamlining lien waiver collection via an automated lien waiver exchange.
We’ll have more to share in the months leading up to the launch of Procore Pay later this year. Check back here for more updates or have updates delivered to your inbox by joining the Procore Pay waitlist.
