Late payments threaten cash flow and project completion for construction companies, with 86% reporting late payments damage productivity. In the “B2B And Digital Payments Tracker®,” Patricia Bonilla, owner and president of Lunacon Construction Group, explains why construction firms need to make tracking and receiving payments a top priority.
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The construction industry’s long-standing issues around payments are ever-present for Bonilla, who started the firm out of her garage with two employees and now manages nearly $500 million in commercial projects. Bonilla has learned to make receiving payments a business priority, aiming to work with clients who have well-established and clearly defined payment processes.
“Most of our clients have a culture of paying on time,” said Bonilla.
Some clients that Lunacon works with will add interest themselves to a payment if it is going to arrive late. Late payments, however, can quickly snowball into bigger cash flow problems that can lead to delaying other projects.
While the construction industry can be unforgiving when it comes to late payments, Bonilla focuses on the things she can control. This is why she targets clients with a culture of paying vendors and tries to understand every client’s individual payment process. Much of Lunacon’s work is with the federal government and local municipalities, and sometimes payments can get held up by bureaucracy, while residential contractors often face less risk of late payment or non-payment.
Bonilla, however, noted that the burden of proof always falls to the contractor. To be proactive, Lunacon has an employee whose job is 100% focused on following the money on projects and ensuring payments are being made in a timely fashion.
It is wise to seek out red flags when guarding against late payments, but sometimes those red flags are not visible until it is too late. Bonilla said one of the industry’s biggest challenges is the ability to view transparent, accurate data. She is charged with introducing new digital solutions to the company that will address cash flow, payments and data in an effort to run as efficiently as possible in what figures to be a difficult economy and challenging construction market throughout 2023.
Bonilla noted Lunacon started in 2007 and grew out of the recession during that time. She tapped the American Express Contract Connections program, which helps owners secure government and big corporate contracts and offers many resources to help businesses grow. Having weathered one storm, Bonilla said she is ready for what comes next and motivated to relieve the pain of late payments with digital tools.
“We are focused on innovation and [getting] more work,” Bonilla said.