How to Implement AP Automation in Construction

Managing accounts payable is a cumbersome task at most construction companies. Between the invoices, multiple vendors, and different deadlines, keeping track of everything and processing it promptly can be challenging. 

AP automation streamlines the process by leveraging technology to reduce reliance on physical paperwork and manual processing. Implementing AP automation can be daunting for many companies. However, following best practices ensures a smooth transaction and maximum benefits. 

Let’s break down seven best practices across three key areas of AP automation. 

Managing accounts payable is a complex and time-consuming task for construction companies, often overwhelmed by piles of invoices, multiple vendors, and varying deadlines. AP automation offers a robust solution by harnessing technology to minimize physical paperwork and manual processing. 

Selecting the right AP automation software can transform this daunting task into a streamlined process, enhancing efficiency and accuracy. By following established best practices, companies can ensure a seamless integration and reap the maximum benefits of automation. 

In this article, we will explore seven essential best practices for AP automation, divided into three critical areas, to help you improve your accounts payable operations effectively. 

First, Assess Your AP Needs  

There are many AP automation systems available, but not every system or process will work for every construction company. Before jumping fully into the world of AP automation, you need to conduct a thorough needs assessment of the company to clearly understand the challenges and how they can be improved. 

Define the Process 

First, look at your current AP processes. This can be done by sitting down with the person in charge of accounts payable, working through a process document, or shadowing them to see how they work. Defining the process sets a clear standard for how work is done. Don’t worry about adjusting at this point—the goal is to have a clear understanding of how AP works at your company. 

Identify Challenges and Opportunities 

After understanding the process, it’s time to analyze and define. Make note of the following areas in your current AP process: 

• Pain points. Where is the friction in your current process? What tasks cause the AP team to get frustrated, or where do they continually find themselves having to work harder than needed? Pain points are specific issues that lead to negative experiences for employees or vendors. 

• Inefficiencies. Similar to pain points, inefficiencies look at roadblocks in the current process. These are the areas where work is slowed or takes longer than needed. They could be steps where work regularly gets backlogged or redundant work. 

• Objectives. In contrast to inefficiencies, consider the objectives of accounts payable. What is the team trying to achieve? This step can help identify the purpose of accounts payable and its impact on the rest of the company. 

• Goals. And finally, take time to define your AP goals. These goals can guide the automation process by helping you find tools to help reach those goals. The team may want to pay vendors faster, cut down unnecessary steps, increase accuracy, or reduce unpaid invoices. 

Next, Explore Your Options for an AP Automation Solution 

After identifying challenges and opportunities in the current process, you can start researching potential AP automation solutions. Not every solution will work for every company, so keep the pain points and goals in mind as you decide. 

Perform a Vendor Evaluation 

After researching strong potential solutions for your needs, perform a vendor evaluation. This is your chance to thoroughly investigate an AP system and ensure it will be a good fit. As you walk through a demo with the representative, look for a few things: 

• Features. Start with the most basic evaluation—does the tool have the features your team needs? You’ve already identified the biggest areas for opportunities, so make sure the tool addresses those concerns and improves your processes. The ideal tool should be able to do everything you need without getting bogged down by unnecessary features. 
• Quality. How is the quality of the product? Is it intuitive and easy to use, or is it complicated and comes with a high learning curve? Is it dependable? Is it regularly improved and updated? 
• Pricing. Cost is a major consideration when purchasing a new tool or partnership. Be clear on the pricing structure, especially the package that your company needs. Ensure you compare apples to apples and the costs of similar packages across vendors. 
• Support. What support will the company offer after you choose their system? Will you be able to easily ask questions and get the help you need? Some tools provide training and regular updates. 
• Risks. As you walk through a demo, be open to potential risks. The platform could be newer and less established or be preparing for an overhaul. Risks don’t always mean the tool isn’t the right choice, but they should factor into your decision. 
• ROI. After learning about the AP automation tool and its costs and features, consider the return on investment. Is the tool worth the cost? How will it improve processes, both in time and resources?

Choose a System Tailored to Construction 

With a wide variety of AP automation tools available, your company has plenty of options. However, when making a choice, be sure to focus on a tool that is tailored for construction. Every company has accounts payable, but construction companies have unique AP needs, so a run-of-the-mill tool might not have the details and features your team needs. As you talk with potential vendors, ask about their applications in construction and ask to see demos of the system doing accounts payable for construction so you can truly visualize how it will work for your company. 

Finally, Ensure a Smooth Transition to AP Automation  

Choosing the right AP automation tool is only half the battle. Ensuring a smooth adoption requires continual effort to maximize the potential of automation. 

Prioritize Data Migration 

The cornerstone of AP automation is reliable data. When moving to a new system, don’t jump in before all the data has been transferred. Double-check the information so you start with clean data instead of building on incorrect information. 

Ensure Adoption with Team Training and Support 

Moving to a new system or tool can be challenging. People are less likely to fully adopt a new process when they don’t understand it or know how to use it. Avoid this by training team members on how to use the new AP tool. In many cases, the vendor can offer in-person or virtual training to anyone involved in the AP process. You can identify an AP champion to lead training in your company and be available to answer questions as they arise for continual support. 

Monitor the New Process 

There’s always room for optimization and improvement, especially with something as important as accounts payable. As you adopt AP automation, consider how you’ll measure your progress or success. Go back to the goals you defined early in the process and consider what metrics you can track to ensure those goals are met. For example, if you set a goal to process invoices faster, track the time from receiving an invoice to when payment is made. If issues arise, you can adjust the process and find a different way to use the tool. 

Experience AP Automation, Built for Construction 

If you’re ready to simplify your construction accounts payable and have more time to spend building your business, turn to hh2, a leader in cloud-based construction management software. Click here to learn more and schedule a free demo.