It’s no secret that the construction industry is facing many challenges right now, including both supply chain and demand issues, along with spikes in transportation and fuel costs. The pandemic has significantly impacted construction industry professionals, and the ripple effect it’s had on projects will likely be experienced for years to come.
However, what most leaders forget to consider as they try to remedy some of today’s project-related issues is how back-office employees are still facing the same challenges that existed pre-pandemic. The issues project managers and procurement are facing right now are critical, but it’s also important to consider other functions within the business, like the accounting department, when it comes to sourcing new solutions.
Let’s examine how implementing new technology in the back office can provide greater financial visibility for the business which can optimize profitability, as well as other ways it can help resolve some of the challenges the finance team is facing today.
Visibility & Control
The name of the game right now is control whether that be with employees, subcontractors, suppliers, cash flow, and payments. Thankfully, AP automation technology can assist with the latter, which can have a positive domino effect on other areas of the business.
An AP automation tool offers 24/7 access to, and visibility of, the payments processed through a singular platform. This gives finance leaders more control over cash flow, which allows for better forecasting for future projects, and the back office can focus on future growth opportunities that can scale for the business with the time saved from having to print and mail paper checks because the software now handles these tasks.
Accessibility & Efficiency
Businesses should also consider an AP automation tool for the convenience this type of technology offers. In one cloud-based platform, finance professionals can upload and route invoices, and make payments remotely from anywhere, and at any time – including job sites.
Additionally, as many construction industry professionals know, the paper chase is real, and the number of invoices per project quickly piles up. Synchronizing so much information and organizing a mountain of documents is no easy feat. With an AP automation solution, the finance team can upload these invoices and have 24/7 access to receipts, previous payment information and more. This not only decreases the amount of time needed to pay bills, but curating reports can easily be accomplished in just a few simple clicks.
Furthermore, the challenges associated with finding, processing, and approving invoices quickly, and then making on-time, mistake-free payments are greatly reduced with an AP automation tool. It’s done by the technology, which alleviates these major pain points for the finance team and provides the ability to focus on other tasks at hand or identifying opportunities that will optimize profitability.
Lastly, this tool can have the domino effect I alluded to earlier. Here’s how: when payments to subcontractors and suppliers are made on time, the relationship strengthens between payor and payee. This can lead to better quality work and faster turnaround times on builds which can provide more profitability for the business in the long run by saving on the costs associated with missed deadlines and having to reprint and resend paper-based payments.
Profitability & Cost-Saving Opportunities
While paper checks may be nearly obsolete from a consumer perspective, this tender comprised 42 percent of all business to business (B2B) payments in the U.S. in 2019, according to the Association of Finance Professionals. This means nearly half of all payments were paid using printed checks, stamps, envelopes and trips to the post office or bank. An AP automation solution reduces the need to manually process payments this way, thus driving down costs associated with these tasks.
Whether it’s manually processing payments or handling of paper checks, these costs can quickly add up over time and have a significant impact on the overall budget, which can affect the profitability of the business in the long run.
Leaders in the construction industry need to source new technology that not only helps solve for today’s unique project-related challenges, but also solutions that can optimize back-office operations, which in turn will positively impact the profitability and scale of the overall business.