Federal Payment Overhaul: What Construction Firms Need to Know About the Move to Digital
04/30/2025A major shift in how the federal government sends payments is on the horizon, and construction companies should start preparing now. Beginning October 1, 2025, paper checks will largely be phased out for federal disbursements, including tax refunds and contract payments. This change is part of a broader digital transformation initiative aimed at increasing speed, reducing fraud, and minimizing costs.
Why This Matters to Your Construction Business
If your company receives federal payments – whether through tax refunds, contract reimbursements, or other government-related funds – you’ll soon be required to accept those payments electronically. That includes payments from agencies you may contract with on public infrastructure or federal building projects.
What’s Driving the Change?
The Treasury Department is shifting toward electronic transactions to streamline operations and cut back on inefficiencies tied to printing and mailing physical checks. Electronic transfers reduce administrative overhead, lower fraud risk, and can help businesses receive their money faster. For industries like construction – where project timelines and cash flow are tightly connected – faster access to capital can make a noticeable difference.
Key Impacts on Construction Firms
Here’s what you can expect once the switch takes effect:
- Faster Payment Turnaround: Funds will hit your business account directly—no more waiting for the mail to arrive or dealing with check deposits.
- Better Fraud Protection: Electronic payments are less vulnerable to theft or loss.
- Simplified Financial Tracking: With digital deposits, it’s easier to trace and reconcile payments within your accounting systems.
Steps to Take Now
To avoid disruption or delays in receiving funds, construction businesses should:
- Ensure Bank Info is Accurate: Make sure your federal filings and any government contract portals reflect up-to-date banking details.
- Review Payment Methods for Federal Projects: If your firm works with public agencies, confirm you’re set up to receive electronic funds through their systems.
- Modernize Your Accounting Processes: If you’re still manually entering check payments, now’s the time to shift to digital tracking tools that can automate reconciliation and improve accuracy.
- Communicate With Subcontractors and Vendors: Encourage partners to also adopt electronic systems for smoother project-wide financial management.