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