Preparing Progress Payment Claims for Private Construction Can Become a Standalone Service

Private construction payment flows are entering the system

An amendment to the Framework Act on the Construction Industry (건설산업기본법), Korea’s core law governing the construction industry, was promulgated on September 8, 2026, and takes effect on January 1, 2027. From that date, newly signed private construction contracts above a certain size will also be subject to an electronic payment system.

An electronic payment system is a mechanism for verifying that construction funds paid by a project owner reach the main contractor, subcontractors, site workers, and equipment and materials suppliers through the required flow. It must also be able to pay each recipient directly, without passing through the accounts of the main contractor or subcontractor.

The payments to be managed include advance payments, progress payments claimed in line with work completed, completion payments, and money paid in advance. The system must distinguish not only subcontract payments but also wages, construction-equipment rental fees, temporary-equipment rental fees, and manufacturing and delivery payments.

The threshold value for private projects has not yet been set. The amendment leaves it to an order of Korea’s Ministry of Land, Infrastructure and Transport, the national ministry responsible for construction policy. Do not design a service on the assumption that every private construction project will immediately be covered.

The fine for paying construction funds without using the system takes effect on January 1, 2028, with a maximum of KRW 20 million. A mistake at one site can be a substantial amount for a small construction business, so 2027 is less a simple practice period than a time to change how records are kept.

The preparation work before payment can stand on its own

Consider a window-installation business with 12 employees. The owner visits sites, while one accounting staff member gathers emails, messages, and files from three main contractors to submit monthly progress-payment claims.

That person enters the contract value and this month’s completed work into a spreadsheet, then finds change-order agreements to update the amounts. They pull worker lists and wages, equipment supplier invoices, tax invoices, and bank-account copies from separate files, then copy them again into each main contractor’s required format.

If one document is missing, the main contractor’s contact calls. Even after a revised file is sent, people may disagree on which version is final. After payment arrives, the accounting staff member must review bank transactions again to explain whose share was received and what remains outstanding.

Some services connect claims, supporting evidence, and payments. Korea’s Subcontract Payment Protection System (하도급지킴이) provides contract registration, electronic payments, tracking, and withdrawal restrictions. That is because preventing misuse of project funds and verifying actual payment is easier when contract data, accounts, and approval rights are controlled together.

This regulatory change does not remove that core payment system. Instead, because the law requires separate recipients and amounts, as well as a flow that can support direct payment, the task of organizing information before it enters the core system will recur across private construction sites.

The separate product is not a “payment system.” It is a “progress claim preparation workspace.” It pulls amounts from contracts and change agreements, matches money due and account details for subcontractors, workers, equipment providers, and materials suppliers, flags missing documents, and creates files for transfer into the designated system.

With this service, an accounting staff member does not create a new spreadsheet every month. They choose a site and confirm only the current claim amount and changes. People must still determine actual completed work, approve extra work, approve claims, and decide on payment. The usable payment systems and the private-project value threshold must also be updated in line with guidance issued before and after implementation.

The first customer is not a large construction company. It is more specifically a specialist contractor with 5 to 30 employees, moving among several sites and submitting different documents to each main contractor. It can also be a small or mid-sized main contractor managing dozens of such partner businesses through calls and spreadsheets.

Overseas, claim preparation was sold before payment

Australia’s Payapps provides a process for main contractors and subcontractors to submit and review claims for completed construction work. Subcontractors pay a monthly fee based on the number of contracts or a fee per claim, and manage contract values, change work, retention money, supporting evidence, and approval status in one place.

Australian design-and-build company Unita said it replaced spreadsheet-based progress claims with this approach and reduced assessment time by 60%. This figure is a statement by the service provider and customer, so it needs independent verification. But the starting problem was clearly recurring claims and calculation errors, not money transfer itself.

The United States’ Oracle Textura manages claims, payments, insurance documents, and lien waivers together. A lien waiver is a US document confirming that, for the amount paid, the recipient will not pursue construction-payment rights. It cannot be directly carried over to Korea, but the flow—do not finalize settlement documents before payment—is useful to consider.

US main contractor ARCO Construction said that after replacing paper claims and scanned files with Textura, its subcontractor payment period fell from 65 days to 45 days. This is also a company case study, but it shows that connecting document collection and payment can reduce repeated checks by accounting staff.

The Welsh Government uses project bank accounts for public construction projects. The project owner puts the shares due to the main contractor and supply-chain businesses into a shared account, then distributes them on the same payment day. The approach reduces the risk that a main contractor’s cash shortage or insolvency blocks payment to businesses below it in the chain.

This is a public-procurement policy, not a subscription service, and it has no standard usage fee. But a system designed for supply-chain businesses to receive payment within five days shows why a screen that first confirms who receives how much can matter as much as the payment itself.

Four pieces you can build separately

1. A partner-company registration document vault

• What it does: Collects business registration certificates, construction-business registration certificates, bank-account copies, contracts, and contact-authority documents once, then creates site-specific submission bundles.
• Who uses it: Steel-reinforcement, window-installation, or building-services contractors with roughly 10 employees that repeatedly submit similar documents to several main contractors.
• Why now: As more private sites need accurate registration of payment recipients and accounts, expired documents and incorrect account details can directly delay claims.
• First screen: For each site, show only three statuses—“submitted,” “expiring soon,” and “missing”—plus the documents that need to be collected again now.

2. A progress-claim assembler for specialist contractors

• What it does: Takes contract value, this month’s completed work, extra work, and labour, equipment, and materials costs, then prepares a claim form and attachment order.
• Who uses it: Specialist contractors with 5 to 20 employees where one accounting staff member handles monthly claims for three or four sites.
• Why now: As information uploaded to the electronic-payment core becomes more detailed, matching recipient-level amounts and supporting evidence matters more than maintaining a single spreadsheet.
• First screen: Under a “Create this month’s claim” button, show the contract value, cumulative claimed amount, current claim amount, and missing evidence.

3. A missing-document follow-up board for main contractors

• What it does: Shows each partner company’s claim deadline and missing tax invoices, work records, and account information, then prepares a request message for the responsible contact.
• Who uses it: Main contractors with around 20 employees that operate three sites at once and receive claims from dozens of partner businesses.
• Why now: For direct payment, matching the total claim amount is not enough. Actual recipients and their amounts must be confirmed before payment.
• First screen: Put companies scheduled for payment this week at the top, split between those ready to pay and those stopped by missing documents.

4. A payment explanation sheet for outsourced construction accounting offices

• What it does: Takes payment results downloaded from a system and bank transactions, then turns them into a client-facing document explaining receipts, payments, and unpaid amounts by site.
• Who uses it: Small outsourced accounting offices that handle books and payroll for several specialist contractors.
• Why now: When payment paths split, there is more need to explain to an owner why the business received less money directly and who was paid directly.
• First screen: After selecting one site, show the project owner’s payment amount, the contractor’s directly received amount, the unconfirmed amount, and transactions to check in sequence.

Watch one company’s claim process today

Call one specialist contractor with 5 to 30 employees and ask to watch, for 20 minutes, how it prepares one recent progress-payment claim. If the same amount or company information is copied three or more times, and missing documents led to two or more follow-ups, there is enough evidence to test a small “progress claim preparation workspace.”

Why this matters where you are

Korea’s case is driven by a specific legal change: electronic payment is expanding into private construction, while the project-size threshold is still to be set. Check whether construction payment rules, direct-payment requirements, or document requirements in your market create the same repeated preparation work. Even where the regulation differs, you can test whether contractors repeatedly re-enter claim data, chase missing evidence, and explain split payments.