What is Days Working Capital?

Bottom-of-Chain or Low-Tier in the construction industry refers to the lowest level of subcontractors or suppliers involved in a construction project. They are at the end of the construction chain, typically providing specific services or materials as subcontracted by higher-tier companies. These can include specialized tasks like electrical work, plumbing, landscaping, or supply of construction materials. Their work is crucial as they lay the foundation for more complex tasks to be executed by upper-tier contractors. They are also bound by the contracts in place, like other members of the chain, although directly managed by mid-tier subcontractors instead of the main contractor.

A subcontractor, also known as a trade contractor, is a specialized construction professional that a general contractor (GC), construction management property, owner, developer, or other entity hires to perform specific work on a construction project. Subcontractors typically specialize in a particular trade or craft, such as electrical work, plumbing, HVAC installation, framing, roofing, glazing, flooring, or drywall installation. They are bound by a contract that outlines the tasks they need to perform as well as deadlines and terms of payment. 

Subcontractors are distinguished from GCs in several ways. GCs oversee the entire construction project, managing all aspects from start to finish, including coordinating subcontractors, obtaining permits, and ensuring compliance with building codes and regulations. Subcontractors, on the other hand, focus solely on their specialized area of work and are responsible for completing their specific tasks according to the project's plans and specifications.

Subcontractors face extensive payment cycles, as they cover all labor and material costs upfront for a project yet receive payment last. Progress billing further complicates the matter, mandating that GCs only reimburse subcontractors based on project completion percentage. This system requires subcontractors to invoice GCs every month for the work completed, which exposes them to various factors that can delay progress billing further. These include:

• using the wrong pay application form, 
• missing documentation, 
• lien waiver oversights, 
• submitting pay apps through the wrong GC portal, 
• general project delays and disputes, or 
• the GC’s own cash flow issues.

As a result, most subcontractors wait about 90 days to get paid for the work they’ve already done, which can strain their cash flow and hamper their ability to take on new projects or pay their employees and suppliers.

This is where Siteline comes in. Siteline is a construction billing solution built specifically to streamline the subcontractor A/R workflow. With Siteline, trade contractors can easily generate and submit detailed pay apps tailored precisely to each GC's requirements. The platform also:

• tracks all compliance requirements and stores pertinent documents;
• tracks, collects, and submits lien waivers for the sub and their lower tiers; 
• ensures approved change orders are incorporated into the schedule of values; 
• provides full visibility into billing statuses across projects—including which GCs pay fastest to better anticipate cash flow; and
• creates accurate billing projections to monitor progress and effectively manage backlog.

By eliminating manual spreadsheets and centralizing all billing data, Siteline helps trade contractors accelerate their payment cycle by an average of three weeks. Discover how Siteline can get your subcontracting business paid faster by scheduling a demo today.

Mobilization in the construction industry refers to the activities and processes that are carried out to prepare for a construction project before the actual work begins. This can involve acquiring, assembling, and organizing resources, including manpower, tools, equipment, and materials needed for the project. Moreover, it encompasses planning, site preparation, setting up temporary facilities like offices or storage spaces, and obtaining necessary permits and insurances. Mobilization is crucial as it ensures smooth execution and helps to avoid potential delays. This phase often involves significant costs, which are usually included in the contract as 'Mobilization Costs'.