Recent news tied to late payments has been, it seems, inextricably bound up in a few verticals. One could be forgiven for thinking that in construction, timely payments are crumbling, while in music, transactions are slowing in tempo.
In the latest Construction Payment Report 2018, released this past week by loan software company Contract Simply, data shows that late payments are taking a toll. The study was done in conjunction with Building Connected, a bid procurement platform, and respondents numbered more than 1,300.
The headline number is that late payments cost players in the commercial construction industry $40 billion a year. Thus, estimated the software firm, that $40 billion represents an “add on” to total project costs of 3.3 percent.
The study also found that among respondents, which spanned several trades, 88 percent of contractors typically wait longer than 30 days for payment. Of that tally, 46 percent cover that waiting period by tapping into savings and credit lines. More than 80 percent of contractors have filed liens against projects in order to get paid.
In reference to payments terms, about 70 percent of contractors are willing to discount invoices in order to get paid within 30 days. That early payment system, the study found, would mean that $18 billion would flow back into the industry along with prompt payment.
Separately, the news wasn’t all about construction firms. The music industry, it seems — particularly the online music industry — has its own share of late payments issues.
As reported by various trade publications, including Variety, the crowdfunding sire known as PledgeMusic — with a roster of more than 3 million fans and 50,000 artists — has been missing payments to several of those artists. Funds that had been pledged as payments to artists, gleaned from fans, had not been collected yet. The payments due, said sites like hypebot, range “from low to mid five figures.”
In tandem with those reports, the company said in a statement that it has “experienced 7-consecutive quarters of growth. We grew nearly 30 percent year on year 2016-2017. This unprecedented growth in campaigns outpaced our infrastructure, which put pressure on our business.”
Furthermore, “an externally imposed transfer of the company’s payment processing systems (which also affected many platforms in the crowdfunding space), complicated matters and caused us to have to divert resources to make the change and adjust how artists payments are processed.”
Thus, the payment delays, said the company.
Also germane to the music industry, Billboard reports that, though the late payments issues tied to Jay-Z’s streaming service TIDAL may be both well documented and continuing, the industry itself is “rooting” for the service. Payments have been erratic, it seems, lagging for months, and then getting caught up for months.
Yet, said the trade, “Labels and distributors are pulling for TIDAL to get its act together because, unlike other digital services, it doesn’t offer an ad-supported tier, nor bargain-basement-priced initial subscription offers, nor family plans. Tidal is aggressively trying to upgrade its subscribers beyond the almost-universal $9.99 price point by promoting its high-fidelity tier for $19.99 — and appears to be succeeding.”
In more homegrown news, in the June Faster Payments Tracker via PYMNTS, initiatives to move money faster (and, thus, in a timely manner) abound, alongside security efforts to make sure that money gets where it needs to go. The fact remains that attacks are on the rise, as are efforts to blunt those attacks.
In one example, ACH Alert released two new offerings that trains its sights on helping account holders gain visibility and control over approving incoming payments.
On a wider scale, discussing payments security in general and international in scope, two executives from Mastercard’s Vocalink business, EVP Gary Kearns and Director of Product Management David Divitt, told PYMNTS’ Karen Webster that banks look at their broad networks to leverage AI and machine learning and short circuit fraud attempts.