While a major contributor to the U.S. economy, the construction industry has seen significant shake-ups over the past two years. Here is how AR automation can solve for these challenges.
The construction and subcontractor industry are highly fragmented, making it difficult to leverage information that is available to streamline operations, and increase cash flow and profitability. This industry weakness made it more difficult during the pandemic to work remote and deal with staffing problems. On top of the problems manifested by the global pandemic, material costs continuing to skyrocket, with some materials seeing an increase of 100% or more. By year’s end, the U.S. construction industry is expected to grow by 1.8% and 3.1% in 2022, before it moderates to an annual average growth of 2.2% over the reminder of the forecast period, according to a recent Research and Markets Report.
Huge amounts of information that the construction/subcontractor industry uses exists in silos. These data silos need to be connected so users can collaborate easily and improve efficiency. Automation solutions can increase the connectivity between silos to enhance data collection, analysis, and reporting in order to improve the collaboration of users to increase operating efficiency. AR automation solutions are needed to connect information silos and enable collaboration of users.
Automation solutions should include features which facilitate connectivity and collaboration.
- Seamless Integration
Construction billing, invoicing and AR software should be seamlessly integrated with your GL and job cost accounting system to automatically update data for all users, reduce errors and increase efficiency. Through automation, companies can improve their tracking and invoicing strategy. Allowing you to import data from job files or budgets, and enter detail as required.
Creating accurate manual invoices from scratch is an error prone process. Errors can result from incorrectly transcribing data from shipping tickets, price lists, purchase orders, customer files and bills of lading and more. By automating AR workflows, errors are reduced, and time is saved. For example, through automation organizations can process lump-sum and percentage-completion invoicing with minimal data entry, add contract detail, and email invoices to expedite processing and payment. Create lien wavers and credit memos and include cash receipts applied to invoices for a complete record.
- Clear and Concise Billing
Automatically capture billable expenses, automate markups, and generate contractor invoices. Define markups by fixed rate, percentage, or custom amount. Assign billing rates to customers and projects. For government jobs, include features for easily itemized and quantity-driven billing in the invoice format you need.
- AR Reporting and Collections
Use date-driven reporting and drill-down functionality. View AR aging and retainage by job and customer. Send email notices of due and past-due invoices direct to your inbox. If a large percentage of your customers are late payers, they can cause days sales outstanding to expand enough to snare you in a cash trap. Late payments increase DSO and the amount of money your company has invested in accounts receivable. Collection bottlenecks can make reducing DSO to get out of a cash trap a real challenge, especially if you do not have automated accounts receivable and collections.
AR automation can increase connectivity to improve cash flow and efficiency and enable collaboration to solve problems and facilitate transactions. Through automation, you can increase visibility and keep your stakeholders informed. Provide your executive group and stakeholders with dashboard reporting of AR KPIs, cash flow, and AR totals by job and customer.
With a connected accounting workflow solution, like award-winning Lockstep, for your finance team to coordinate work with customers and vendors, you can go digital and enjoy the benefits of office automation.