Stat decs (short for statutory declarations) are a necessary part of the construction industry.
The CCDC explains that a statutory declaration of progress payment distribution by a contractor is a sworn statement for use by the contractor as a condition of receiving payment for either the second and subsequent applications for progress payment or the release of holdback funds.
Stat decs designed to protect the paying party in construction jobs and when used correctly, are a great way to decrease risk. Every general contractor should have a system in place to collect, create, organize, and distribute stat decs.
We’ve found that manual processes around stat decs create bottlenecks in your progress claims application process. The good news: There’s a solution to streamline and automate this process.
Get to Know your Stat Decs
First and foremost, it’s important to know the types of stat decs and the differences between them.
In Canada, stat decs are always unconditional. Unconditional stat decs should only be used when the payee receives the final payment. If you happen to sign an unconditional declaration first, you’re essentially giving up your rights whether you receive payment or not. We do not recommend this!
And don’t forget that stat dec policy varies by location. Be sure your subcontractors are aware of the rules where you’re doing business.
The Process Causes Backup
Typically, a stat dec is a required attachment with a subcontractor’s progress claims application. Ask any accounts payable manager or controller what it’s like to receive applications for progress claims straight to their inbox, and they’ll likely tell you the process is crazy. Not only do they receive tons of AFPs per job, they’re chasing down subs who did their math wrong, or who included an unapproved change order, or didn’t attach a stat dec.
And even if you received the stat dec, you have to confirm it’s the right kind, not expired, and signed. The email trails go on and on as your team tries to track all the construction documents down.
Say you receive all the right documents in a timely fashion, keeping the files organized is still a nightmare.
Long story short, in an attempt to organize the chaos, many construction companies have put manual processes in place. And as GCs grow and increased the number of jobs, manual stat dec management slows everything down and can negatively impact the bottom line – not to mention the strain on your accounting teams.
Automate Stat Dec Management
You’ll collect and sign stat decs thousands of times a year. Even with a workflow in place, you’re looking at hours spent attaching the declarations, organizing the paperwork, and creating new decs for every progress claim from your subcontractors.
We have a stat dec management solution – no digging through emails or sorting through filing cabinets required. Easily pull up any stat dec when needed. GCPay is a progress claims management software that also manages stat dec creation and exchanges. Having the ability to populate, organize, and associate these documents with every progress claim across the entire organization is vital to keep the process moving quickly and accurately.
You get a full view of the status of all of your decs and the associated progress claim. Even better, you can customize settings and require that any stat dec is signed before the progress claim is submitted so there’s zero risk.