voucher system

voucher system

A method of disbursing money from a construction loan.The developer or the general contractor (general) will give vouchers to subcontractors (subs) or suppliers as they are entitled to payment under their own contracts.The voucher certifies that the work has been performed properly,or the supplies are free from defect and accurate in price and amount delivered.The subs or the suppliers then take their vouchers to the construction lender,who writes checks to them.The drawback is that it is management intensive for the lender, who is usually operating on such tight margins that it can't afford the administrative staff to service a voucher system.The more common system is the draw system, in which the general receives large chunks of money on a prearranged draw schedule and then disburses them to subs and suppliers.