The cheque’s in the mail

Rethinking construction payment processes to boost productivity and limit risk

The construction industry has been on a path of digital evolution for the past few years, with technologies such as the Internet of Things (IoT), reality capture, and autonomous vehicles increasingly being implemented across businesses to optimise efficiency and reduce time-investment.

But while there’s effort to integrate new technologies on ground at the construction site, businesses tend to often overlook the potential use of technologies in the back-office. Here are four reasons companies may benefit from rethinking their construction payment processes to increase productivity and limit risk.

The move to digital means more efficiency and control

By replacing traditional payment processes with modern solutions, companies can boost efficiency and control – for all stakeholders – across invoicing, payment, and compliance management.

Ultimately this can reduce risk as a general contractor, owner, or subcontractor, while also freeing up teams’ time to focus on activities that are more beneficial to your business. A collaborative payment management solution not only helps manage the payment and billing processes across project participants, it also can forge better, more lasting partnerships in the industry by providing assurance everyone is paid fairly and on time.

Such technology can streamline the payment process for construction companies of all sizes by managing payment due dates and related actions, as well as improving accuracy.

It also eliminates inefficiencies and a slew of risks, including human error, improper payments, and liens that prevent the clean handover of a project to the owner.

It is essential that the industry adopts innovative processes which ensure that increasing demands can be met.

Collaboration means convenience

Investing in payment management solutions is an effective way for construction firms to maintain strong relationships with subcontractors.

This is because they can quickly pay subcontractors who have immediate cash flow needs.

Promptly disbursing payments can help create a partnership of convenience and trust - making it far more likely that subcontractors will accommodate their needs when necessary.

However, firms can’t take a half-measure approach to automated payments. It’s no use if some jobs remain on an older manual system, while others are on the new system.

This can easily cause confusion and stall collaboration and progress. To truly maximise efficiencies, there is no better approach than going all-in with implementation.

Automated payment solutions also enable team members to collaborate within one shared environment.

With all parties using the same collaboration platform, owners, general contractors, and subcontractors all need visibility into compliance and payment status.

As a result, they can anticipate and collaboratively address potential issues before they grow into pressing problems.

Technologies Can Result In Fewer Errors

In addition to strengthening relationships and ironing out inefficiencies, automated payment solutions can help companies eliminate manual steps and miscalculations. This can be done by automatically generating accurate invoice documents linked to schedules of value, for example. Plus, they can help firms centralise the tracking of compliance and lien waiver management, alongside other important documents and reporting.

This helps streamline these crucial tasks, and it prevents further safeguards against risk to all stakeholders.

New systems can increase visibility

Additionally, firms can implement a standardised cloud-based system for financial processes across their ERP and accounting system, which can provide support reports, dashboards, and analytics. This enables firms to capture and analyse payment data across their business, providing a more strategic current state of affairs, and helping answer questions delivered to them when and how they want them.

In all, these modern approaches to payment solutions can help mitigate financial, legal, or reputational risk, while improving cash flow.

Ultimately, this improved cash flow also allows organisations to more predictably meet payroll, hire, and invest in their business.

As construction sites continue to incorporate cutting-edge technology to help teams complete projects in a safer, more streamlined way than ever possible before, it simply makes sense to further modernise the payments process as well.

It can provide all stakeholders with peace of mind by helping put an end to those pesky site.