The ability to access personal emails, utility bills, invoices and other important documents, as well as make payments via a mobile device, is a convenience most professionals and modern consumers now consider a necessity for streamlined, efficient productivity. Few business owners and professionals have benefitted more from this innovative option than construction business owners.
Often on the go, construction professionals face unique challenges that rarely affect businesses in other industries. Business owners must travel between jobsites managing bids, multiple timelines, projects and personnel while still attempting to keep the business paperwork — including accounts payable (AP) — timely and in order. It is a time-consuming, sometimes overwhelming task that leaves many struggling to stay ahead.
Savvy owners have discovered a better way to manage and grow their businesses, safeguard their privacy and cybersecurity and increase the bottom line: They are moving to cloud-based AP automation.
On the Go & in the Know: Why Mobility Is a Must
Accessibility is crucial to keeping the AP process going anywhere and anytime, and it must fit an individual’s schedule and preferences. The COVID-19 pandemic taught business leaders this invaluable lesson. When the back office is shut down or missing staff, business can suffer in several ways. It often results in a backlog of unprocessed invoices, leading to delays and late fees. This cascading effect impacts the cash management of business vendors and tests their patience. During periods of tight supplies and long wait times for certain building materials, this adds to an already stressful situation for both business owners and clients. Staffing issues often result in invoice duplicates or incorrect invoice submissions, which are disastrous for customer relations.
A recent survey from Yooz of more than 1,200 finance and accounting professionals revealed some telling statistics. The study reports that 32% of organizations listed paying vendors and suppliers late as one of their top challenges in the AP process. When asked why invoices are being paid late, 40% of respondents cited “slow processes” as the primary reason. While the study indicated many have learned how to better work remotely, there are still the hurdles of managing a paper-heavy, outdated AP system.
A cloud-based AP automation system can solve all those problems. It captures documents as they come in, regardless of their format. The best automated system automatically extracts and indexes all relevant information thanks to artificial intelligence (AI)-powered technologies such as optical character recognition and smart data extraction backed by machine learning. It then routes the invoice to the right person according to rules every business can personalize, define and tweak to work for their specific needs.
Mobility, then, becomes an opportunity to get necessary accounting work done anywhere, anytime — whether on the road or in a trailer at a jobsite. A few clicks will take users to documents necessary to review invoices and address retention or lien waivers. As a result, both costs and time required to process and pay invoices drop dramatically, and profitability rises.
Making the Right Choice Is Crucial
Owners who have taken their business to this next level have learned it will only work if it’s an airtight solution. With fraud on the rise, construction businesses need a secure platform for their employees, external partners and contractors to submit invoices and receipts.
The right AP automation solution makes a tangible difference when managing multiple construction projects which require allocating costs across multiple dimensions. Machine learning can automatically handle that type of complex cost allocation. What’s more, managing several construction projects often means multiple locations and multiple channels to collect and receive invoices. A state-of-the-art automation platform can perform multichannel merging of scattered invoices with a single, unified capture process. Mobility allows companies, from any mobile device, to manage receipt of materials from the back of a delivery truck and to reconcile them with intelligent two- or three-way matching.
With that much activity, fraud detection capabilities are more important than ever, since almost one-quarter of businesses reported a fraud attack in 2022, according to a recent survey by Ardent Partners. Using cloud-based solutions with AI-powered machines and deep learning capabilities for AP enables a much higher level of fraud detection and risk prevention for businesses.
A Smart Payment Power Tool
Given the fast pace and unique challenges of the construction industry, a cutting-edge digital and mobile workflow is a real power tool. Secure storage in the cloud translates into more peace of mind not only for profitable, growing companies but for its vendors as well. Suppliers should be able to track their payment status online. Ideally, a system would allow those vendors to sign up with a single email address and pick their preferred payment method once, so the system would remember it for all future invoices.
Construction-business growth trends include digital payments, which have become the standard for business-to-consumer (B2C) transactions and increase the ease and convenience of business-to-business (B2B) transactions. In the Yooz survey, respondents reported that almost one-quarter of U.S. companies already use digital payments, with another 49% planning to follow suit this year. Smart business owners are getting on board.
Construction business professionals have discovered that eliminating physical checks reduces unnecessary problems. Owners no longer must rely on timely production from office staff because they can approve payments quickly, take advantage of early-pay discounts, and save time and money by accomplishing those goals from any location at any time. Vendors that opt for payment by virtual card get their funds almost instantly, which significantly increases goodwill and can act as a safeguard against supply chain issues in the future. Suppliers will always show preference to companies that are time efficient with payments.
The development of AP automation systems has given construction business owners a way to generate additional revenue from cash back with the use of virtual cards. Virtual cards are a great way to catch fraud and waste before an inaccurate payment can go out, because the system will automatically check for the volume and velocity of payments to identify any outliers. Finally, digital payments generate a detailed audit trail.
The older business model for the construction industry has at its core an AP system that is cumbersome, outdated and costly. It does not include a much-needed cyber safety net, money-saving efficiencies or a way to increase revenue streams. Take rising prices for gas which the construction industry can’t run without. When a traditional cost center like AP begins producing recurring revenue, you can quickly start to offset those increased costs. The innovation of an intelligent, user-friendly, cloud-based, AP automation system is the best tool in a construction business owner’s belt.