As a construction company grows, it must build relationships, take on new opportunities, and spend money. A strong accounts payable department is one of the most overlooked aspects of growth. With the right processes and systems in place, you can build a robust accounts payable team at your construction company for easier transactions, a more accurate view of your cash flow and assets, stronger vendor relationships, and more.
Simplify your processes and improve your workflows with these seven best practices for AP admins:
1. Define and Document Processes
Accounts payable is a crucial aspect of any company, but it is often overlooked or forced to take a backburner to other activities. After all, most companies are focused on making money (in accounts receivables) instead of spending it. However, all businesses require capital and making purchases, so a strategic approach to accounts payable can set a company apart from the competition.
A streamlined AP process starts with a strong strategy and buy-in from senior leaders. Experts at Deloitte recommend collaborating with management to create a strong culture around capital and payments, stating, “This is about more than ensuring invoices are received and processed in a timely fashion. It’s about adopting a management focus that emphasizes the importance of optimizing payables and freeing up working capital to fuel growth.”
As part of that strategy, AP admins must establish solid processes and share them with the entire company. It can be challenging to force people to follow a procedure, especially if the rules haven’t been followed in the past, but combining processes with the right culture makes gathering information and processing payments much easier.
Be clear about processes, both those that happen with other employees and vendors, as well as processes that occur within the AP department. Document those processes so anyone can follow them if there is turnover or confusion. That documentation should also be shared with employees so they know the process, what is expected of them, and where they can turn with any questions. When employees understand their role in getting payments made on time and how it impacts the company, they’ll be more willing to follow the process.
2. Automate Approval Workflows
Even with smooth, documented processes, accounts payable systems can still hit roadblocks in the approval process. Payments need to be approved by leaders or members of various teams, and tracking them down can be difficult.
Remedy this situation by automating the approval workflow. Instead of printing physical paper to add to the stack on a leader’s desk that needs to be sorted through and approved, use a cohesive digital system. These platforms, like hh2, automatically send documents to the right people for approval. That means AP admins spend less time hunting down approvals on physical paper and more time getting work done. Automated approval requests can go straight to the proper person’s email or mobile device so they can be approved in a timely manner.
3. Streamline Invoice Acquisition
There are numerous potential bottlenecks in the accounts payable process, but a common challenge for companies is securing invoices. When work has been completed but invoices haven’t been submitted, or when invoices arrive weeks (or months) after the work has been done, it can cause a headache for admins.
To alleviate this problem, look for ways to streamline invoice acquisition. The easiest option to do this is to go through an online platform where vendors can send invoices, or AP admins can scan and upload physical invoices. When these systems are integrated with other AP software, the invoice can automatically be sorted and readily available for payment.
4. Make it Easy to Capture Receipts
With crews likely on multiple job sites or multiple managers purchasing materials, there are likely numerous receipts coming into the accounts payable team, both online and in paper form. Staying on top of those receipts can be challenging, and the last thing you want is to lose or misplace a receipt and have a late payment.
To make the process easier, simplify your receipt capture process. There are numerous ways to do this, from a physical mailbox or file where employees can put physical receipts to an app or system where employees can easily scan, email, or text receipts. Because team leaders and managers are often on their phones or tablets for many other tasks like tracking schedules and getting project updates, having a digital drop box or system to gather receipts is easy—all they have to do is scan or take a picture of their receipt using the device they already rely on daily.
No matter your system, what matters most is that all employees are trained on how to use it and make it part of their regular routine. The goal is to make it easy for employees to share their receipts so they will be more likely to do so in a timely manner.
5. Leverage a Mobile App
Construction is a busy industry with employees and crews on the move, often working at sites all over your geographic region. Instead of waiting for employees to turn in physical receipts and invoices in the office, lean into a mobile app to gather information quickly and easily.
Many other construction-related tasks happen via an app, so adding AP tasks is a natural connection for employees. By putting systems in place using devices that are already in employees’ hands, the entire AP process can move much more smoothly.
6. Integrate AP Software with the Accounting System
Accounts payable connects to the overall finances of your construction company, but many companies treat it as separate, either choosing to do things by hand or in a different system. However, moving between tabs and systems or having to enter information multiple times is monotonous and introduces the potential for errors and bottlenecks.
Instead, integrate your AP software into your accounting system. This way, all of your invoices, payments, and pending payments are connected to your other financial information for an accurate and comprehensive view of your company’s financial status. No more wondering if you have enough capital to cover an invoice or missing a payment—with an integrated system, AP admins can easily get the information they need all in one place. As an added bonus, digital AP systems can often communicate with vendors for faster payments and more accurate processes.
7. Analyze Data for Efficiencies
Like all areas of the company, accounts payable should always be looking for ways to improve. Regularly look at your data for any inefficiencies or opportunities, as well as missed or late payments. You might find that you waste weeks every quarter mailing payments to a vendor when you could easily send them a digital payment and get immediate confirmation. The data can also reveal if the company is paying any late fees, where the money is going, and where there are difficulties or slowdowns in the process. By regularly analyzing this data, AP admins can stay on top of their processes for smoother transactions.
Streamline your AP with hh2
One of the best ways to stay on top of your AP processes is with hh2, a leader in cloud-based construction management software. Click here to learn more and schedule a free demo.