An alliance in the construction industry is improving the payment process.
Textura Corp., www.texturacorp.com, Deerfield, Ill., says it has entered into an innovative alliance with Greensill Capital, www.greensill.com, Manchester, U.K., to allow general contractors to deliver accelerated payments to subcontractors. The program will be titled EPP (early payment program). Textura will deliver the technology for this program via CPM (construction payment management) and its technology platform. Greensill will perform the underwriting and provide the funding, which includes engaging Morgan Stanley, www.morganstanley.com, New York, N.Y., to securitize these payments to deliver preferential funding to select parts of the program. Turner Construction Co., www.turnerconstruction.com, New York, N.Y., worked with Textura and Greensill in the development of EPP, with plans to launch the program in early 2015.
Textura–CPM is used by more than 300 general contractors and owners. The solution electronically integrates all construction payment-management process components, which includes billing, progress claims, lien-waiver collection, statutory declarations, sub-tier waivers, compliance management, and payments, into one seamless workflow. CPM helps contractors and others involved in construction projects understand significant efficiency benefits from automation and streamlining, and risk reduction from enhanced control and visibility.
By increasing the functionality of CPM to include EPP funding by third-party financial institutions, CPM allows participating general contractors to offer subcontractors the opportunity to receive payment for invoices approved by the general contractor earlier than the typical payment date.
Textura and Greensill worked closely with Turner to conceptualize and develop this program. Recently, Turner began a companywide implementation of Textura’s CPM program to facilitate adoption of the accelerated payment program and to make the payment- management process more efficient for Turner, its contractors, as well as its clients.
General contractors will have a customized EPP program, and Greensill will establish separate funding sources for each general contractor. Under each program, enrolled subcontractors have the opportunity to be paid shortly after invoice approval. As a result, there are many benefits. For instance, general contractors will be able to lower bids. Additionally, general contractors would be working with financially healthier subcontractors, which results in fewer defaults and lower claims. Subcontractors will be able to prepare bids expecting earlier payment after the work is performed, and accelerated payments can result in stronger balance sheets, business expansion, and less risk for the business owner.
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