Dive Brief:

• In what could help them avoid problems on their construction projects, general contractors and material suppliers can read performance reviews, obtain project histories and get payment rankings on more than 23,000 subcontractors throughout the U.S. 
• With the launch of Subcontractor Payment Profiles earlier this month from construction software company Levelset, contractors have access to information indicating how likely individual subcontractors are to pay their suppliers, therefore avoiding potential schedule delays and disputes.
• The free profiles also include contact details, license and bond information, payment data from recent construction jobs, preferred payment paperwork and a portal to request documents or payment from the subcontractor. The data and content used to populate the profiles comes from Levelset's expansive database of millions of construction projects, vetted reviews from construction companies that have utilized the respective contractor's services and industry data, according to a release.

Dive Insight:

Many GCs put a project out for bid and select partners based on word of mouth with very little vetting, construction credit expert Thea Dudley told Construction Dive. "Contractors often know nothing about the subcontractor's relationship with its suppliers and whether they pay them on time," she said.

The impact to a GC when working with a subcontractor with a history of slow payments can lead to suppliers putting liens on a project, she added.

The Subcontractor Payment Profiles join Levelset's more than 37,000 General Contractor Payment Profiles that can help subcontractors identify slow-paying general contractors before taking on work with them.​

The problem of slow payments has been exacerbated by the challenges of the COVID-19 pandemic. Just one construction business in 10 always gets paid in full, a 75% drop from before the pandemic, according to Levelset's 2021 Construction Cash Flow & Payment Report. Payment delays have also worsened: Just 9% of companies always get paid on time, a decline of 60% from last year. 

In addition, subcontractors are four times less likely than general contractors to get paid within 30 days, and 50% less likely to get paid in full. One in five subcontractors, suppliers and other sub-tier parties regularly wait beyond 60 days to collect payment. 

The new tool shows a sub’s payment history and how and when they pay their suppliers. "How someone pays their bills is a good indication of how they run their business," Dudley said.