The Impact of Digital Payments on Construction

Now is the time for construction companies to look to the latest digital payment technology to benefit from more visibility and security around payments, as well as faster transfer of funds for all business needs.
By Jim Campbell
August 1, 2019

While B2C transactions have experienced a significant shift toward digital payments, particularly with the proliferation of apps like Apple Pay and Zelle, nearly 70% of all B2B payment volume is still paid by paper check. This is particularly true in the construction industry, where contractors often rely solely on paper checks to pay for labor, goods and physical supplies.

Why does this penchant remain so strong? A variety of factors are at play in construction, but what it really boils down to is simple: Paper is how decision-makers have handled payments for decades. The industry is notorious for maintaining the status quo, particularly when it comes to adopting new technology and managing money—but that is starting to change.

According to a recent construction study by Ernst & Young, nearly 98% of respondents agreed that digital solutions are critical to the future viability of their company. This same study also cited project cost management as one of the top two issues keeping construction business owners up at night, so the potential impact of technology is certainly recognized.

Contractors often cling to paper checks because they think it helps control cash flow, but in reality, a paper check is just the start of a digital transaction. Now is the time for construction companies to look to the latest digital payment technology to benefit from more visibility and security around payments, as well as faster transfer of funds across the business.


One of the primary challenges with paper checks is the lack of visibility they provide into payment status. After a general contractor hands a subcontractor a check on the jobsite or a contractor pays a vendor for purchased goods, the company has no idea when funds will be debited from its bank account.

The timing is totally reliant on when the check is deposited and how long the bank takes to process it. Waiting to receive compensation for work or services without visibility into the fulfillment process is equally frustrating.

In contrast, digital payment solutions provide 24/7 insight into payment status, including both committed and approved costs. The money changes hands without requiring any paper, manual data entry or a visit to the bank, all while giving construction executives visibility into when the funds will leave their accounts.

The latest payments technology also comes equipped with mobile applications, meaning contractors can view payments anywhere at any time, allowing them to stay on the jobsite for longer, rather than returning to the office to take care of paperwork.


Preventing data breaches is top-of-mind across all industries, particularly in relation to sensitive financial information. While paper checks can easily be misplaced or stolen, digital payments provide a higher level of security for both parties involved in the transaction because payment processors have specific controls in place to protect data.

Money moves from one business to another across secure networks designed to mitigate any threats or vulnerabilities, ensuring greater accuracy in billing versus processing a paper check.

Additionally, financial technology helps prevent fraud through built-in alerts and approvals. If a payment is made that does not match up with transaction histories or work orders, the system will notify users in real time to help stop fraudulent payments before the transaction is completed.


Arguably the most impactful benefit of utilizing digital payments is the faster transfer of funds. By eliminating paper and manual processes like data entry, construction executives can save the company time and make payments more efficiently. Automation keeps payments on track, which helps improve working relationships, particularly with subcontractors. If subcontractors know they will receive funds in a timely, professional manner, they are more likely to work with the same general contractor on their next project.

Digital technology also provides different payment options, such as virtual card or ACH, so subcontractors and vendors can select a payment type based on their preference. Offering multiple forms of electronic payment benefits the construction firm as well, as it opens up the opportunity to experience early payment discounts or rebates.

The Bottom Line

By creating automated, repeatable payment processes, construction executives are prepared for future expansion and can take on more jobs without the worry of scaling financial processes.

By relying on technology that promotes transparency and efficiency around payments, decision-makers can ultimately focus more on jobs and less on the back office, eliminating any concerns about how and when payments are being made.

by Jim Campbell
Jim Campbell is the VP of Construction at AvidXchange, the industry leader in automating invoice and payment processes for mid-market businesses. Jim joined the company in 2016 after decades in the construction software industry and is now responsible for driving buyer growth in AvidXchange’s construction vertical. Jim began his professional career in 1979 with Timberline Software Corporation, a pioneer in the development of application software for the construction and real estate industries before it was purchased by Sage Software in 2003.

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