Slow payments cost the U.S. construction industry an estimated $280 billion in 2024, equivalent to approximately 14% of total construction costs that year. Building material suppliers face a unique challenge: they must offer competitive Net 60 or Net 90 payment terms to win contractor business, yet actual collection times average 83 to 96 days. This cash flow gap forces suppliers to finance contractor operations for months before receiving payment. Modern net terms financing solutions enable suppliers to receive advance payments on eligible approved invoices, often within 24 to 48 hours, while maintaining competitive payment terms for buyers, fundamentally changing how construction materials businesses manage accounts receivable.
The construction industry experiences payment delays nearly a month longer than other industries. Contractors waited an average of 83 days to collect payment, creating cash flow challenges that affect businesses throughout the construction supply chain. For building material suppliers, this extended cycle means covering labor, inventory, and operational costs for two to three months before seeing any payment.
Several factors make construction accounts receivable uniquely challenging:
Payment delays remain a significant concern. Rabbet's 2024 research found that 82% of contractors experienced payments more than 30 days late, up from 49% in 2022. This trend puts increasing pressure on suppliers who must finance these extended payment cycles.
Construction payments differ fundamentally from typical B2B transactions. Materials may ship to job sites weeks before formal invoicing occurs, creating timing mismatches between delivery and billing. Multiple invoices often tie to single projects with varying payment schedules, and disputes on one invoice can hold up payment on others.
Building material suppliers face additional challenges when contractors prioritize paying labor and subcontractors over material suppliers. Without proper accounts receivable management systems, these extended cycles create working capital shortfalls that limit growth and threaten business viability.
Construction accounting requirements vary by business model and contract. Suppliers primarily selling materials may need invoice tracking, delivery documentation, customer credit management, and payment reconciliation. Businesses working under project-based construction contracts may also need specialized functionality for progress billing, AIA payment applications, and retainage.
When evaluating construction AR software, prioritize these capabilities:
Invoice Generation and Tracking
Payment Management
Compliance and Documentation
Finance teams currently spend an average of 14 hours weekly on manual AR tasks that automation eliminates. Implementing proper construction accounting software transforms this administrative burden into a strategic advantage.
Modern AR platforms connect directly with popular accounting and ERP systems. Native integrations with QuickBooks, NetSuite, Xero, and Sage Intacct enable two-way data synchronization that eliminates duplicate entry. For building material suppliers already using these platforms, integration means faster implementation and minimal workflow disruption.
Resolve Pay's platform integrations with major ecommerce platforms including Shopify, BigCommerce, Magento 2, and WooCommerce extend these capabilities to online sales channels. This connectivity ensures consistent AR processes regardless of how orders originate.
The fundamental paradox facing building material suppliers is clear: competitive pressure forces them to offer Net 60 or Net 90 terms, but they cannot afford to wait three months for payment. Net terms financing solves this equation by advancing funds immediately while customers retain their preferred payment windows.
Modern non-recourse invoice financing works differently than traditional factoring. When a supplier offers Net 60 terms through a financing platform:
This structure means suppliers receive cash in days rather than months while buyers get the extended terms they need. The financing platform handles collections and assumes approved credit risk.
Real-world results demonstrate the impact. Elston Materials increased margins from 25% to 30% using this approach, a five-point improvement that transformed their business economics. ConEquip achieved 30% year-over-year growth by offering competitive terms without cash flow strain.
Non-recourse structures provide protection that traditional recourse factoring cannot match. Under non-recourse arrangements, sellers are generally protected from repayment obligations arising solely from covered buyer defaults on eligible approved financed invoices, subject to program terms.
Key advantages include:
Building material suppliers report that 95% of B2B customers prefer not to pay upfront. Offering competitive terms through financing platforms captures this demand while maintaining healthy cash flow.
Traditional credit evaluation for contractors involves calling trade references, pulling credit bureau reports, and manually analyzing financial statements. This process takes 7 to 14 days and still misses crucial risk signals that spreadsheets cannot capture.
Resolve Pay's AI-powered credit engine evaluates buyer creditworthiness using proprietary models, business information, and relevant financial and behavioral data. Its credit assessment process helps suppliers make informed decisions without relying exclusively on manual trade reference checks.
This comprehensive evaluation delivers credit decisions in under 24 hours while making more informed risk assessments than manual processes. Resolve Pay's business credit check capabilities use proprietary AI to provide these real-time decisions.
Speed matters in construction. When a contractor needs materials for an urgent job, waiting two weeks for credit approval loses the sale. AI-powered decisioning enables suppliers to say yes faster while maintaining appropriate risk controls.
Credit limits can be reviewed and adjusted based on updated buyer information, payment performance, and Resolve Pay's underwriting decisions. Any increase or adjustment remains subject to buyer eligibility, verification, and approval. This continuous monitoring catches problems early rather than discovering defaults after they occur.
Archipelago Lighting demonstrated what's possible, reducing approval time from 10 days to 24 hours while offering 20x higher credit lines than their previous manual process allowed. The combination of speed and higher limits drove significant revenue growth.
Manual collections processes fail in construction's extended payment environment. With 60% of invoices paid late, suppliers need systematic follow-up that scales without adding headcount.
Modern agentic collections platforms automate multi-channel outreach sequences while preserving customer relationships. Unlike aggressive collection agencies that damage long-term business relationships, these systems use friendly, professional communication calibrated to payment behavior.
Automated collection sequences typically follow structured escalation:
The system pauses automatically when payment or dispute notification arrives, preventing awkward follow-ups on resolved issues. All interactions log to invoice records, creating complete audit trails.
Construction operates on relationships. The contractor you pursue aggressively for a late $5,000 invoice may represent $500,000 in annual business. Effective collections balance payment acceleration with customer preservation.
AI-powered collections analyze customer value, payment history, and communication preferences to customize outreach. High-value customers with occasional late payments receive different treatment than chronically delinquent accounts. This segmentation improves both collection rates and retention.
Trenchless Supply reduced AR workload by 90% while maintaining strong customer relationships. The time savings enabled their team to focus on strategic activities rather than chasing payments.
When standard collection efforts fail, building material suppliers have legal recourse through mechanics lien rights. Understanding these protections helps recover payment on disputed or defaulted accounts.
Mechanics liens provide security interest in the property where materials were delivered. Every U.S. state offers these protections, though specific requirements vary significantly:
Filing a mechanics lien signals serious intent to recover payment and often prompts settlement discussions. Property owners face potential foreclosure if liens remain unresolved, creating strong incentive to ensure suppliers get paid.
If voluntary payment does not occur, lien enforcement requires formal legal action:
Most claims settle before foreclosure because the legal process becomes expensive for all parties. However, proper documentation from initial delivery through collection attempts strengthens your position if litigation becomes necessary.
On bonded projects, suppliers can claim against contractor payment bonds as an alternative to property liens. Bond claims follow similar notice requirements but provide different recovery paths.
Point solutions that address only one aspect of AR create operational complexity and miss optimization opportunities. Integrated platforms combining credit decisioning, financing, AR automation, and collections in single solutions deliver superior results.
Building material suppliers historically cobbled together multiple vendors:
This fragmented approach creates data silos, inconsistent customer experiences, and administrative overhead coordinating between systems. Information falls through cracks, and opportunities for optimization go unrecognized.
Integrated platforms eliminate these friction points. When credit decisions, financing, invoicing, and collections share common data, each function informs the others. Credit limits adjust based on payment behavior. Collection intensity varies by customer value. Financing advances flow automatically when invoices generate.
Consolidation delivers measurable advantages:
For building material suppliers, this integration means faster time to value and sustainable competitive advantage.
Beyond technology solutions, operational best practices accelerate collections and reduce disputes.
Establish Clear Terms Before Delivery
Document payment expectations in writing before materials ship. Include:
Written terms prevent misunderstandings and strengthen legal position if collection action becomes necessary.
Invoice Promptly and Accurately
Delayed or incorrect invoices delay payment. Best practices include:
Monitor Aging Actively
Review AR aging reports weekly, not monthly. Focus attention on:
Early intervention prevents small problems from becoming large losses.
Long-term contractor relationships provide business stability but require careful credit management. Consider tiered approaches:
Regular business reviews with major customers identify emerging issues before they affect payment. Understanding their project pipeline and financial situation helps anticipate credit needs and collection timing.
For building material suppliers seeking to transform their accounts receivable operations, Resolve Pay offers a comprehensive platform designed specifically for B2B commerce challenges.
Resolve Pay combines net terms financing, AR automation, AI-powered credit decisioning, and agentic collections into a single integrated solution. This approach eliminates the complexity of managing multiple vendors while delivering measurable results.
Key capabilities for construction material suppliers include:
Resolve Pay customer stories illustrate potential operational benefits across different B2B industries. Trenchless Supply reported a 90% reduction in AR workload, while concrete supplier Elston Materials increased margins from 25% to 30%. Individual results depend on business circumstances and implementation.
Resolve Pay supports integrations with major ecommerce, ERP, and accounting platforms, helping suppliers connect credit management, invoicing, payments, and reconciliation with existing workflows. Implementation timelines depend on integration requirements and operational complexity.
For suppliers ready to offer competitive payment terms without cash flow strain, reduce credit risk exposure, and automate the entire AR lifecycle, Resolve Pay delivers the integrated capabilities construction materials businesses need.
Building material suppliers face extended payment cycles averaging 83 to 96 days in construction compared to 30 to 45 days in other industries. Suppliers must offer Net 60 or Net 90 terms to remain competitive, yet cannot afford three-month payment waits. Additional complexity can arise from project-based billing, retainage provisions, and AIA documentation requirements when applicable. Material suppliers also face challenges involving delivery records, contractor credit limits, and delayed invoice payments.
AR automation reduces manual workload by 50 to 90% while accelerating the entire payment cycle. Automated systems generate invoices immediately upon delivery, send scheduled payment reminders, and provide real-time visibility into payment status. Integration with accounting systems eliminates duplicate data entry and reconciliation errors. AI-powered collections use multi-channel outreach to follow up systematically without requiring staff time, significantly reducing days sales outstanding.
Net terms financing allows suppliers to offer extended payment terms like Net 60 or Net 90 while receiving payment within 24 to 48 hours. The financing platform provides an advance on eligible approved invoices, with the amount and any subsequent settlement determined by the applicable financing agreement. Under non-recourse arrangements, sellers are generally protected from repayment obligations arising solely from covered buyer defaults on eligible approved financed invoices, subject to program terms.
Consider filing a mechanics lien when standard collection efforts have failed and the amount justifies legal action. Before filing, confirm that you have preserved lien rights by meeting applicable preliminary notice requirements, maintaining detailed delivery records, and complying with your state's filing deadlines. These deadlines vary by jurisdiction, claimant type, and project circumstances. Consult a construction attorney before relying on a specific filing timeline.
Resolve Pay addresses the entire accounts receivable lifecycle through an integrated platform combining net terms financing, AI credit decisioning, AR automation, and agentic collections. Suppliers can offer qualified buyers Net 30, 60, or 90 terms while receiving advance payments on eligible approved invoices, often within 1 to 2 business days. Resolve Pay customer examples demonstrate improvements in AR efficiency, cash flow management, and sales growth. Results vary by business and program participation.
This post is to be used for informational purposes only and does not constitute formal legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Resolve assumes no liability for actions taken in reliance upon the information contained herein.