CrossCheck Blog

CrossCheck Blog

Check Processing & Payments Information

Payment Solutions for Building Materials Dealers and Contractors

Posted by Brandes Elitch | Thu, Jan 30, 2020 @ 11:14 AM

payment solutions bldg materialsIf your business sells building materials to the construction industry, then you already know that it takes a long time to get paid. It doesn’t matter what you sell — lumber, dry wall, plumbing supplies, roofing materials, flooring — the contractors who buy from you have cash-flow issues that they deal with every day.

The 2019 National Construction Payments Report, a survey conducted in collaboration between Levelset and TSheets by Quickbooks, concluded that getting paid in the construction industry is slower than just about every other industry. How slow? The average time to payment is 83 days!

This is frustrating and demoralizing for everybody involved in the building project.

Article Summary

  • The Numbers Behind the Construction Industry
  • What Happens When Contractors Don’t Get Paid?
  • How can you help your customers to buy more building materials from you?
  • The CrossCheck Solution to Buying and Selling Building Materials

We will demonstrate how to help your contractor customers pay for building materials in a timely fashion. This will make their customer experience with you better and more rewarding, so that they keep coming back to your store to buy more building materials in the future.

The Numbers Behind the Construction Industry

bldg supply center and dudeHow big is the U.S. construction industry? Well, the numbers are astonishing.

A recent survey by the Associated General Contractors of America ( shows that the industry has 680,000 employers, over seven million employees, and creates $1.3 trillion worth of structures each year.

Another survey, by GoContractor (, shows that the industry has annual expenditures of $1.231 billion, and spends more than $10 trillion in goods and services annually. This is such a big number it is hard to even comprehend!

What Happens When Contractors Don’t Get Paid?

Contractors have to chase down the money owed them with phone calls, e-mails, and invoicing. Here are some repercussions noted in the Levelset-TSheets payments report:

  • About half of U.S. contractors do not get paid on time.
  • 67% are subcontractors and 30% are general contractors.
  • Only three out of every five contractors (61%) are paid in full on every job.
  • 34% draw from personal savings or taking out loans (54%) to cover labor and materials while waiting on payment.
  • 58% of the survey respondents have had to file a mechanic’s lien and 98% have had to threaten to file a lien in the past.

Despite these challenges, contractors are still expected to pay their subcontractors and vendors on time.

And perhaps the most powerful conclusion: almost half (42%) of contractors say they pay their subs or suppliers before they get paid themselves.

concrete pour pano

Not getting paid on time, affects everybody: the lenders, developers, builders, general contractors, material suppliers, and subcontractors.

If you are selling building materials to a contractor who absolutely, positively has to get started on the job now, you need to find ways to make it easier for this customer to pay because they need your help. You need to make the payment possible for them.

Because of this, contractors are constrained in their ability to take on new jobs and pay for tools and materials. This affects you because this means that they cannot buy more building materials from you until they have the funds to do so.

How can you help your customers to buy more building materials from you?

Well, one dubious way to help is to provide a high interest store card, a credit card issued by a third party, in some cases with the name of your business on it. Sometimes, this is advertised as “ninety days, same as cash.”

The problem is that if the entire balance is not paid off in the 90-day grace period, then interest on the outstanding dry wall and baseboardbalance is charged back to day one, typically at around 26%.

I always thought that anything above 25% is considered criminal usury, but apparently not if the card is issued in certain states.

A store card should be a last resort for a customer, kind of like going to a payroll lending business or getting a title loan for your car. The reason is that many of these borrowers will not pay off the balance on time, and will end up revolving the outstanding balance for a long time to come. It becomes a debt trap. With high interest rates like this, most of their monthly payment is going to interest, not principal. You are not doing your customer a favor with this kind of offering and they will resent your association with it.

The CrossCheck Solution to Buying and Selling Building Materials

CrossCheck takes a different approach. We are joined at the hip with the building supply industry because most-high dollar payments are made by check, not credit card. Typically, the accountant or bookkeeper for the contractor will insist on using checks since this makes reconciliation and the audit trail easier to follow. And as a business, you do not want to pay 3% to clear a rewards card transaction when CrossCheck can guarantee a check for one-fifth of that!

But there is another way we can help. The service is called Multiple Check.

wood framing verticalYou, the building supplies dealer, ask your customer, the contractor, if he needs some extra time to pay (of course he does!).

Thirty days seem to be a good lifeline for many contractors. Let’s say that the contractor buys $10,000 worth of roofing materials. You tell him to write four checks to cover the $10k, all dated today, and choose the amount of each check and the individual dates for CrossCheck to deposit them. The checks can be authorized in just a minute via your PC, phone or credit card terminal. At that point, you run the checks through the imager we supply, and the checks are franked and given back to the contractor. From that point on, we take care of everything.

We can even deposit the checks on the respective due dates and put the money in your business account if you are using Multiple Check with our Remote Deposit Capture premium. If a check bounces, you will never see it because we keep you, the merchant, whole so you do not suffer a loss. What could be easier?

Now you have a happy contractor customer. They get to buy the needed building materials, and they do not have to undergo a credit check or pay interest. You have just given them a good customer experience. They will be back, thanks to your customer service, with a little help from CrossCheck!

Download our free guide to see how Multiple Check with Remote Deposit Capture can help your building supply center.

Multiple Check Insider's Guide

Topics: Building Materials, Construction, Multiple Check

Written by Brandes Elitch

Brandes Elitch is Director of Partner Acquisition for CrossCheck Inc. A certified cash manager and accredited ACH professional, he garnered a Master of Business Administration from New York University and a Juris Doctor from Santa Clara University.