How Viva Capital’s Quick Pay Program is Revolutionizing Subcontractor Financing

Quick Overview

Subcontractors can get paid faster on construction projects through a Quick Pay program, which allows them to request early payment on completed work without taking on debt or waiting through standard 30 to 60-day payment cycles. The construction industry's retainage practices and slow GC payment timelines leave most subcontractors covering materials and labor out of pocket, and a dedicated Quick Pay program is one of the few financing structures built specifically around how subcontractor payments work.

Trying to figure out how to get paid faster as a subcontractor? You’re not alone. The construction industry is not set up to help subcontractors thrive. It’s designed to mitigate risk for owners and general contractors (GCs). Between retainage and slow payments, subs are left with little, if any, cash in hand at the end of the day. But Viva Capital’s Quick Pay Program for subcontractors is changing the way construction professionals look at payments and helping tradespeople and others downstream accelerate cash flow.

Traditional Payment Cycles Don’t Work for Subcontractors

You are the heartbeat of every project you work on. Because of this, owners and GCs can’t risk having you walk away from a project until every “i” is dotted and every “t” is crossed. But that also means you’re hit with retainage. Based on industry averages, that’s five to ten percent taken off the top, according to the Construction Financial Management Association (CFMA). You may not see that money for months, if ever, depending on how the project goes.

On top of this, the cash you are eligible to receive before a project concludes can take ages to pay out. While most GCs think they’re following the 30-day rule, subs wait an average of 56 days for payment, according to Billd. Over two-thirds of subs say they’re generally slowly paid by GCs.

Cash Flow Gaps Often Delay Progress on Projects

The harsh reality is that 75 percent pay out of pocket for materials, and 86 percent cover labor expenses while waiting on payments, Billd surveys show. One-third admit they’ve pulled from retirement or personal savings to cover cash deficits.

But not every subcontractor can afford to do this, and when you come up short at a time when materials need to be purchased or crews require payment, projects may stall.

Payment Delays Strain Labor and Supplier Relationships

If you’re lucky enough to have a strong team and suppliers, they may be willing to wait a short period for payment, but it comes at the cost of your relationship. The longer they wait, the less likely they are to continue working with you.

Viva Capital’s Quick Pay Program for Subcontractors Works Differently

Even though there’s clearly a need for financial support, most construction invoice financing options are not designed for subcontractors. However, Construction Quick Pay Programs are different and designed with you in mind.

Other Subcontractor Financing Solutions Have Drawbacks

Funding products tied to projects generally don’t work for subcontractors due to liens. And most other subcontractor financing solutions have other drawbacks.

• Bank Loans: Generally speaking, bank loans tend to be the most ideal solution for funding long-term growth, but less than half of all businesses that apply receive full funding, per the Small Business Credit Survey. Considerations like credit scores, time in business, and collateral are often barriers.
• Lines of Credit: A line of credit is often a close second and works better for short-term needs like bridging gaps. However, approval is difficult because the requirements are similar to those for a loan.
• Credit Cards: Some subcontractors turn to credit cards, particularly those offered by suppliers that allow you to secure discounts. Unfortunately, qualifying is still difficult, interest rates tend to be high, and many subs find themselves caught in a debt trap, paying only interest on their charges and exponentially increasing the cost.
• Equipment Financing: It’s sometimes easier to qualify for equipment financing if you need tools, vehicles, or machinery. The asset serves as collateral, though you’ll typically need a sizable down payment.

Quick Pay Eliminates Subcontractor Payment Delays and Provides Working Capital

Quick Pay is an alternative to subcontractor financing. Instead of borrowing money, you simply receive the money you’ve earned faster.

Receive Most of Your Payment Right Away

With Viva’s Quick Pay Program, your GC adds you to a digital portal and notes which projects you work on. When you complete work, you simply request early payment through the portal. If the GC agrees that the work has been completed satisfactorily, he approves it, and then Viva pays you most of what you’re owed right away. You can opt for same-day payment if you need the cash right away or go with a standard automated clearinghouse (ACH) payment, which means the funds typically become available in about two business days.

Get the Remaining Balance After the Contract Pays Out

When the owner pays their invoice, and your GC would normally pay you, you’ll receive the remaining portion of your invoice, minus a small fee for the advance.

Retainage is still separate. This pays out under your customary terms with your GC.

Quick Pay Offers Many Financial and Operational Benefits for Subcontractors

Receiving upfront cash can be transformative for subcontractors by itself, but Quick Pay supports your business growth in other ways, too.

Quick Pay Provides Fast Funding for Subcontractors without Debt

Because Quick Pay is not a loan, there’s no debt added to your balance sheet. That means there’s no interest and no ongoing payments. You’re free to focus on the future.

An Early Payment Program for Construction Subs Lets You Bid on Larger Projects with Confidence

Most subcontractors have had to turn down work at some point. It’s unfortunately more common with large, lucrative projects, simply because you can’t afford to come out of pocket for all the expenses. It may go without saying, but this also shortchanges your company’s growth, keeping you smaller and cash-flow constrained for longer. But when you know Quick Pay is available, it’s much easier to say “yes” to a project. You may not have to take advantage of it, but simply knowing it’s there if you do need it can give you the confidence to bid and accept.

The Quick Pay Program Also Supports Prime Contractors and Project Success

While it’s true that primes don’t always understand the cash flow constraints construction companies face, when they do, they quickly see Quick Pay Programs as a win-win solution.

Quick Pay Reduces Disruption and Increases Subcontractor Performance

When subs have project cash flow support, most common project delays are eliminated. Being able to keep projects on track is a win for everyone involved. GCs also tend to see better performance. Simply put, when you know that you won’t be constrained by cash flow, it’s easier to invest in quality materials and put in the time to ensure the job’s done right.

Quick Pay Enhances Trust and Reputation in Project Delivery

It’s no secret that subcontractor trust and cash flow go hand in hand. By ensuring you’re taken care of financially, primes strengthen the relationship and can count on you to keep working with them for the long haul.

Construction Factoring and Quick Pay Systems Deliver Real-World Results

It’s one thing to hear how a program works from the provider, but hearing directly from construction professionals through Quick Pay case studies brings the solution to life. In their own words, our clients say the Viva Quick Pay Program gives them “the ability for our subcontractors to be funded predictably and faithfully.” Moreover, “Using the Quick Pay Program has helped our subcontractors, and we’ve never had any issues or complaints with using the program.”

Explore Viva Capital’s Quick Pay Program for Subcontractors

If you’re a subcontractor who wants to get paid faster, share a link to this article with your GCs, and we’ll walk them through the program.

If you’re a GC interested in the program, know that there’s no cost to your firm to participate. To learn how it works, contact us for more details.

Frequently Asked Questions About Subcontractor Financing and Quick Pay