Chasing retainage and progress billing on construction jobs

The Problem: Why Retainage Matters

In the construction industry, retainage represents money that has already been earned but is withheld until the project is completed to satisfaction. The problem arises when these funds remain unclaimed, sitting in someone else's account, sometimes for as long as a year after the job is finished. This delay can cause significant cash flow issues, as finance teams are often focused on new projects and may not prioritize chasing down these funds. As a result, earned revenue is left uncollected, impacting the financial health of the business.

Current Industry Practices and Their Shortcomings

In most cases, construction companies rely on manual processes to manage retainage and progress billing. This typically involves spreadsheets or disconnected software tools to track payment schedules and amounts due. The inherent issue with this approach is its reliance on human memory and attention. When teams move on to new projects, follow-ups on closed jobs are often neglected, resulting in delayed payments. Furthermore, the lack of centralized visibility across multiple projects can lead to inefficiencies and missed opportunities for collection, further straining cash flows.

ARPilot's Unique Approach

ARPilot transforms the way B2B finance teams manage retainage by automating the entire invoice-to-cash cycle, including retainage and progress billing. With ARPilot, each pay application and retainage balance carries its own schedule. This means that even if a balance is held for months, it receives a reminder on a predetermined date rather than relying on someone to remember it. The system also escalates the reminder to the person responsible for releasing the funds, ensuring timely action. This automation is complemented by human oversight, as every customer-facing action requires approval, maintaining a high level of control and accuracy.

Key Benefits and Measurable Outcomes

• Scheduled Reminders: Retainage and progress billing receive automated reminders and escalations, reducing reliance on manual tracking and memory.
• Centralized Visibility: ARPilot provides a single dashboard view of all held balances, allowing finance teams to manage outstanding payments more effectively.
• Improved Cash Flow: By ensuring timely follow-up and collection of retainage, ARPilot helps maintain a steady cash flow, crucial for business operations.
• Human Oversight: Every action is queued for human approval, preventing any unintended communications or entries, thus safeguarding customer relationships.

FAQ

What is retainage in construction billing?

Retainage is a portion of the payment withheld by the client until the completion and satisfaction of a construction project. It's meant to ensure the contractor completes the job as agreed, but it often sits unclaimed, affecting cash flow.

How does ARPilot automate retainage follow-up?

ARPilot schedules reminders and escalations for each retainage balance, ensuring they are addressed on specific dates rather than relying on memory. This automation ensures that all outstanding payments are actively pursued.

Can ARPilot integrate with our existing accounting software?

Yes, ARPilot syncs bidirectionally with QuickBooks Online and connects to other systems via REST API, CSV import, or a custom adapter under an Enterprise agreement, allowing seamless integration with your existing tools.

How does ARPilot ensure customer relationships are maintained?

Every customer-facing action initiated by ARPilot requires human approval before it is executed, ensuring that all communications are accurate and reviewed, thus preserving customer relationships.

What are the pricing options for ARPilot?

ARPilot offers a free tier for up to 10 invoices a month, with a Starter plan at $99 per month, a Professional plan at $299 per month with API access, and an Enterprise plan with negotiated terms. Payment-plan volume carries a basis-points fee, and annual billing offers about two months free.