Subcontractors across the U.S. are dealing with a shifting terrain. One of the biggest issues is just getting cash, which is slowing down building and putting the ability of some firms to stay in business at risk. 

Industry data shows that late payments, higher material costs, and a lack of workers have caused over $97 billion in extra costs for subs over the last year. Cost overruns can lead to numerous problems for businesses, the most serious being bankruptcy.

Many subcontractors have to wait 60 to 90 days or even more to get paid, which is much longer than the normal time for invoices to be paid. Small businesses are hit the hardest by late payments because many of them work on tight margins and have to pay for goods and labor directly.

A leader from the industry said, “Subcontractors don’t just do the work; they pay for it upfront.” “Delayed payments can stop the projects entirely and put their long-term survival at risk.”

A new study by IAT Insurance Group explains that late payments are happening more often because the economy is unstable and interest rates keep going up. This makes short-term loans harder to get and more expensive, which is bad for businesses that need working cash to keep their crews on the job.

Competition for contractors has grown, adds the study, which makes it harder to get upfront cash or arrive at better terms. As the economy starts to slow down, a lot of people are worried that debts will rise, which will have an effect on the whole industry.

Problems with cash flow are made worse by long-term problems, like fluctuating goods prices. Subcontractors often have to deal with sudden price hikes that may be reflected in the value of their original contract.

There is also a surging support for using technology to make transfers easier and safer. Contractors are looking into tools like digital escrow accounts, real-time lien tracking systems, and automatic invoicing platforms that may help speed up some of the processes that are slowed down because of old ways of billing.

In order to keep their income stable, some businesses are looking to government and federally funded projects. As competition heats up, it’s becoming more important to have advice on how to move through this space in regard to how small businesses can work with government agencies.

Additionally, project owners and general builders are being told to check on the financial health of their subcontractors as early as possible in the project's progress. To lower risk and avoid expensive project delays in the middle, they might be able to make payment schedules clearer and encourage open communication.