What is a Draw Request?

Accounts Payable (A/P) in the context of the construction industry refers to the amount of money a company owes to its suppliers or vendors for goods and services received but not yet paid for. These could range from raw materials bought for construction, to equipment rental fees, to labor costs for contractors. Essentially, they are debts that a construction company needs to clear within a specified timeline. Managing A/P effectively is crucial in the construction industry to maintain positive relationships with suppliers and vendors, ensure a steady supply of materials and services, and promoting healthy cash flow. Regular reviews of the A/P process can help avoid potential financial hiccups and keep the construction projects running smoothly.

Insurance, in the context of the construction industry, refers to a contract known as an insurance policy, that a company or individual buys from an insurance provider to reduce the financial risk associated with potential loss or damage. There are numerous types of insurance policies like liability insurance, builder's risk insurance, and workers compensation that are specifically designed to safeguard construction businesses against various hazards. For example, if a construction site accidentally experiences unexpected damages, having proper insurance can alleviate the burden of these costs. Each insurance policy has a premium and a deductible, and the terms and conditions can extensively vary based on the policy. The selection of insurance types and coverage should be made meticulously considering the nature and scope of the construction project.

Progress Billing is a method commonly used in the construction industry, where billing for a project is done at different stages as it progresses, rather than asking for full payment upfront or at the completion of the project. This type of billing is beneficial both for constructors and clients. For constructors, it helps maintain the cash flow required for the ongoing expense of materials and labor. For clients, it provides assurance that they are paying for the work only as it is being completed and allows them to budget effectively. Each invoice is usually based on the percentage of work completed, thus it is also known as percentage-of-completion billing method. Proper documentation, like progress reports or photos of the construction site, often accompany these invoices as a proof of progress.