Late payments are hurting more than subcontractor cash flow

Slow and unreliable payments are influencing more than subcontractor cash flow. They are increasingly affecting how subcontractors price work, who they choose to work with, and how much risk they build into future jobs.

By Ian Moss, marketing leader for Australia and New Zealand at Payapps.

Recent Payapps survey data from 754 subcontractors across Australia and New Zealand highlights this issue. In the survey, 77 per cent of subcontractors said a builder’s payment reputation influences their decision to bid or price future work, while 57 per cent said they have increased rates or added a risk margin because of slow or unreliable payments.

Scott Lockwood, head of customer success at Payapps. (Image: Payapps)

That makes payment behaviour more than an accounts issue. It is now a commercial issue for builders.

The same survey found that when payments are delayed, the top three impacts on subcontractors are tighter cash flow, increased stress and pressure, and greater difficulty paying suppliers.

Late payments are also far from uncommon. Only eight per cent of respondents said all their progress claims are paid on time, while more than a quarter said delays typically last two weeks or more.

Against that backdrop, it is no surprise that 40 per cent of subcontractors said they would be interested in an optional early payment arrangement on approved progress claims, even if it meant receiving a slightly reduced payment amount.

The challenge for builders is that early payment requests are already happening, but often through informal conversations, side arrangements or one-off project decisions. That can create inconsistency, poor visibility, and added administrative and governance risk.

This is where Payapps’ new Early Payment feature comes in.

Rather than treating early payment as an informal favour, the Early Payment feature in Payapps gives builders a structured, transparent way to manage requests for earlier payment directly within the progress claim workflow they already use. Builders can control which projects and subcontractors are eligible, define available payment timeframes and discounts, and manage requests through existing approval workflows.

According to Scott Lockwood, head of customer success at Payapps, that structure is what makes the difference.

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“Traditional early payment arrangements often try to accelerate approvals and payments while adding manual administration at the same time. That combination makes them difficult to govern and even harder to scale,” he said.

“Our Early Payment feature in Payapps changes that by embedding requests directly into the progress claim and approval workflow. It gives builders a practical way to support subcontractor cash flow while maintaining visibility, control and commercial discipline.”

Sarah Constructions is one builder already using the approach.

“Our early payment approach gives subcontractors flexible access to funds when they genuinely need it, without changing underlying contract terms,” said Lewis Skittrall, head of commercial at Sarah Constructions. “By keeping the process optional, transparent and embedded within our existing Payapps claim workflows, we’re able to support our supply chain while maintaining strong commercial governance across projects.”

For builders, the opportunity is not just to respond to early payment requests, but to manage them in a structured, scalable and commercially sound way. Done well, an optional Early Payment program can help improve project margins, strengthen supply chain resilience, support subcontractor cash flow when it matters, and reinforce a builder’s reputation as a fair and dependable partner in a competitive market.