How to Streamline Substantiated Billing with Automated Cost Coding

Substantiated Billing can be complicated, time-consuming, and overwhelming. Especially if your construction business still relies on manual processes to do it. Whether you use CSI, AIA, or UNIFORMAT, ensuring accurate cost coding is key to substantiated billing success. 

Using construction billing automation and AP automation for construction, automated cost coding eliminates human error and improves construction cost code tracking for faster approvals and compliance., frustratingly prolonged processes, and potentially having your invoice rejected because of missing or incomplete documentation. 

Whether you’ve just started working with substantiated billing or have grappled with it for years, this guide offers best practices, statistics, and recommendations to help your business stay on budget, stay compliant, and better forecast future projects with the right cost-coding construction software.

How Manual Cost Coding Slows Down Payments & Increases Errors

A successful business — especially in the fast-paced construction world — prioritizes efficiency. Whether it's cost efficiency, optimizing workflows, or improving collaboration, every operational process (no matter how small) can cause a ripple effect through every level of an organization. Manual data entry can seem like a harmless aspect of your operations — but when it comes to accurate and timely cost coding, you could be holding your business back.

Time-consuming data entry for invoices and job costs

Whether working in the field or the back office, a construction company is a hectic environment with multiple high-priority tasks on any given day. A study by Ernst & Young revealed that it costs $5 for each manually entered HR task (like payroll entry). With multiple job sites to manage, manually entering cost codes is a massive drain on resources that can negatively impact revenue generation.

Inconsistent cost categorization leads to financial discrepancies

The point of substantiated billing is a detailed record of how every dime is spent on a particular project. Trying to enter cost codes (especially if your accounting specialist is juggling multiple code formats simultaneously) can lead to discrepancies that cause approval and payment delays. 

Errors and delays in invoice approval due to missing documentation

Human error is a significant problem in most industries, simply because the influx of data to process in the modern age is unlike anything seen before. This pressure to keep up the pace, combined with the drain of trying to enter (potentially) hundreds or thousands of lines of data by hand, makes human error almost inevitable. According to a GNSA report, manual entry accounts for 35% of payroll errors.

Compliance risks with certified payroll reporting

Human error, inconsistencies, and inefficiency all contribute to compliance problems. If data is missing, incomplete, or incorrect, you could be found in violation, and the cost can range from delayed invoice approval to legal problems. 

For example, Certified Payroll has a strict submission schedule (usually every week or every other week). If your processes are slow and inefficient, you could risk missing submission deadlines. 

The Substantiated Billing Benefits of Automated Cost Coding

Efficient substantiated billing hinges on clean and reliable systems that mitigate risk and maximize productivity. While nothing can ever replace the human mind, construction billing automation is a great way to support performance. Here’s how:

Real-time cost allocation across multiple projects

Job cost software for contractors makes documenting substantiated billing much easier and faster by centralizing information and automatically allocating accurate cost coding (regardless of the number of concurrently active contracts, or cost code formats). 

Eliminate manual errors with integrated job cost tracking

AP automation for construction can all but eliminate human error because manual data entry is no longer necessary. Instead of spending days hand-typing line data, your accounting specialist can review automatically generated reports, and rest easy knowing inaccuracies are easier to spot — or avoided altogether.

Faster approvals and payments with automated invoice workflows

Construction cost code tracking makes recording and compiling accurate substantiated billing, approval, and payment timelines fast and easy. All data is clear, organized, and accurate as well which streamlines approvals and payments even further.

Better financial visibility for forecasting and budget tracking

With a clear and always up-to-date picture of your financial standing, automated cost coding in construction eliminates guesswork when determining profitability. This means you can better stay on budget, forecast, and bid more effectively (and competitively) on future contracts. 

Optimize Substantiated Billing Processes With hh2 Automated Cost Coding

The accounting and automation market is flooded with software promising to optimize your workflow. However, general contractors should choose a solution that understands and adapts to the specific nuances of the construction industry. 

Designed by construction professionals for construction professionals, hh2 cloud-based construction software offers key features that construction firms (at any scale) need to succeed. 

hh2 Document Flow for AP automation and invoice verification

The Document Flow feature by hh2 expedites invoice, receipt, and reimbursement management by centralizing your purchasing documentation into a single platform. This visibility and organization helps you avoid going over budget, improves approval times, optimizes cost coding (of course), and even offers snap and submit mobile capabilities.

Seamless integration with Sage 300, Trimble, and other ERPs

If you already have an ERP system, your cost coding automation software should integrate seamlessly. The last thing you want is to trigger bottlenecks or unnecessary downtime because incompatible software disrupts or complicates your existing IT ecosystem. 

Cloud-based cost tracking for real-time field updates

Because hh2 is cloud-based, all of your departments, teams, and systems are centralized and continuously up-to-date. By breaking down data silos and streamlining the connection between your field and office workflows, your entire organization can run more efficiently.

Automated prevailing wage and certified payroll reporting

If you’re working on government contracts, then the additional hurdle in your substantiated billing process is keeping up (and staying compliant) with certified payroll processes. Automated prevailing wage and certified payroll reporting ensures your WH-347 forms are always accurate and on-time.

Substantiated Billing Best Practices for Implementing Automated Cost Coding

To ensure your cost coding automation goes as smoothly as possible, the following substantiated billing best practices can guide you through implementation.

• Standardize cost codes across all projects and divisions: While there are multiple cost code formats (AIA, UNIFORM, CSI), we recommend choosing one and sticking with it. The format you choose depends on your needs and your typical clients. However, note that government projects and large-scale organizations tend to prefer CSI.
  
  
• Train finance teams and project managers on cost tracking tools: Offer training seminars and demos of the construction billing automation software so your accounting specialists and project managers feel confident to hit the ground running.
  
  
• Use AP automation software to match invoices to job codes: Make the substantiated billing process even faster by implementing construction cost code tracking that automatically matches your invoices to the appropriate job codes.
  
  
• Leverage real-time reporting for faster financial decision-making: As we mentioned earlier, your ability to grow as a company requires visibility on your current financial picture. Using software like hh2 offers real-time reporting capabilities that make it easier to forecast, and plan for the future.

The Future of Cost Coding in Construction Billing

Adding AI to financial processes can unlock numerous benefits. The need to move quickly in today’s fast-paced business world means you can’t afford to waste time (and money) on outdated pen-and-paper bookkeeping, especially if you want to stay competitive and profitable. 

Thankfully, you’re in the perfect position to optimize your substantiated billing, certified payroll, and field reporting process — as long as you use the right tools. 

hh2 is a pioneer in construction cost coding automation and billing efficiency. It’s our mission to be a strategic partner that makes you more adaptable, prepared, and profitable. 

Schedule a demo to learn how hh2 cloud-based automation and easy integration can transform your productivity and profitability!