Electronic communication is putting an end to the paper trail in almost all transactions. Although the construction industry was not among the early adopters, it is now getting in step. Automated construction payment systems promise to put an end to complicated and time-consuming invoicing and payment systems by moving the entire process to the Internet.
Chain Store Age executive editor Marianne Wilson spoke with Patrick Allin, CEO of Textura LLC, which markets construction payment-management services, about how innovations are improving construction payment processes, communication and efficiency.
Chain Store Age: As an overall sector, where does the retail construction industry stand with regard to the use of electronic budget management and automated payment management? Are they very common?
Patrick Allin: Many in the construction industry have been using automated tools for budget management and a few use electronic payments. We see more of this activity among retailers that typically complete a large number of projects annually. To date, however, retailers use one solution, their general contractors use another and their sub yet another.
But the rate of market adoption of our Textura services suggests that the construction industry and retailers/ developers are ready to embrace more use of technology to make the entire process more efficient.
CSA: How does the automated-payment-management process work? Is it secure?
Allin: Payments can be made using Textura’s technology through the ACH interbank network. This is a highly secure bank-to-bank network, which processes more than $30 trillion of payments a year.
CSA: How does it impact project reporting?
Allin: Each user accesses the same database, so information on budgets, contract amounts, change orders, payments and retention is consistent for each participant. Project reports are accurate and fully supported by subcon-tractor and GC invoicing.
CSA: Does automated payment management have the potential to lower project costs? If so, how and by how much?
Allin: Users report substantial reductions in hours spent preparing, reviewing and monitoring each payment application—as much as 50 hours per project, per month. It also eliminates data entry, check preparation and lien waiver collection costs, and reduces paper usage, fax and other communication costs.
CSA: Are there any other benefits that need to be mentioned?
Allin: Yes. There is less tension between retailers/developers and their construction teams—GCs and subs. GCs and subs are free to focus on construction with fewer invoicing and payment issues.
CSA: What distinguishes your solution?
Allin: Textura solves the invoicing, legal-document preparation and collection, payment process for each participant on a construction project—retail-er/developer, GC, subcontractor, material supplier, architect, financial institution, title company. No other company does this.
CSA: Is much training required to use the system?
Allin: No. The system is easy to use and has a process-flow engine, which reminds each user of their next steps. Typically, a subcontractor can learn to use Textura in an hour, a GC and owner in several hours. We provide classroom, DVD-based and Internet-based training.
CSA: Are the start-up costs high?
Allin: No. Most owners/developers bring up several projects initially and then once they are comfortable bring up all of their new projects. There are no up-front license fees, consulting fees or support fees.
CSA: What about the fee for transactions?
Allin: There is a transaction fee paid each month by each user who is paid on a construction project. The fee ranges from $5 to $50, depending on the size of the user’s payment. Textura users believe that this transaction fee is substantially less than it costs them today to process invoices, prepare legal documents and be paid.
CSA: For an owner, what do you think is the No. 1 benefit that comes with this type of system?
Allin: Owners have less legal and financial risk. Lien waivers are collected prior to payment, reducing owner exposure to non-payment lien risk. Textura’s system is financially intact— invoices match payments and lien waivers, legal documents are correct and each payment application has a similar look and feel.