In today’s construction industry, time management is just as important as doing great work. But one of the most time-consuming tasks at hand is accounts payable (AP) for construction companies. When an essential task such as accounts payable takes up valuable time, many businesses view this as a loss of productivity.
To some, traditional AP management seems like the more cost-effective option compared to spending thousands of dollars on unfamiliar technology. However, recent advancements in industry technology have made it possible for construction companies to save time and money with construction AP automation.
But what is construction AP automation software?
AP automation for construction is when a construction company implements accounting software that eliminates the need to manually enter and process construction accounts payable tasks. The software automates each step of the process, doing what used to take hours in just a few seconds.
The Challenges Faced by Construction AP Professionals in Managing Expenses and Invoices
If the quality of work is the heart of a construction company, then accounts payable is the lifeblood that keeps the heart pumping. On any given day, a construction AP professional is responsible for:
But one of the key (and most challenging) responsibilities is the first task on our list—tracking open jobs.
Each job has its own vendors, employees, equipment, codes, and regulations that must be accounted for. Couple that with trying to manage cost overrun, and this task alone demands perfect accuracy and lots of time (when done manually).
According to KPMGs 2023 Global Construction Survey, 83% of construction firms say their top priority is increasing the accuracy of estimating materials and equipment.
If there’s one thing that the construction industry understands, it’s the value of hard work by reliable hands. Sore backs and calloused hands are responsible for incredible feats of ingenuity at an even more incredible pace.
But when it comes to the back-end side of a construction company, manual data entry can cause headaches and mistakes that cost you a lot of money.
It’s time to delve into the four main challenges that AP professionals face every day with the inefficiency of traditional processes.
1. Managing multiple job sites can get confusing
The larger the organization, the more job sites there are to manage. Each job has its own vendors, equipment, and even self-performing contractors. That means AP teams have a lot to keep track of (and a higher risk of making mistakes).
2. Inefficient AP disrupts effective communication
With multiple job sites versus one AP department, or even possibly a single AP specialist, miscommunication and frustration can happen frequently.
3. Slow approval causes frustration and possible missed payments
Approving invoices takes a lot of time, and with company leaders constantly on the move, it can take even longer. This means a greater risk of delayed payments–which creates frustration and inconvenience for crucial vendors waiting for their invoices to get paid.
4. Human errors are bound to happen–no matter how skilled the AP specialist
One of the most infamous challenges of running a construction company is the need to meticulously adhere to (and stay ahead of) compliance regulations. Despite a specialist’s best effort, they’re people, not computers–and staring at a spreadsheet for hours on end can take its toll.
But what is the actual cost of human error?
The hard truth is that how you manage your accounting impacts more than just your revenue. The efficiency of your AP system has far-reaching consequences in every aspect of your business.
Now we’ll explore the key stakeholders in your construction AP management–both internally and externally–who suffer the consequences when AP isn’t optimized.
Now that we’ve covered why it’s important, how it impacts stakeholders, and the biggest hurdles most construction companies overcome… It's time to take action toward optimizing your accounts payable construction processes.
But before discussing tools and supporting resources, we’ve outlined seven best practices that every construction firm should follow.
Implementing digital processes can eliminate hours of manual data entry and produce clear and reliable workflows throughout your organization. This drastically reduces the time and strain that manual AP demands of your accounting specialist. Plus, digital automation can execute accurate accounting and ensure everyone is paid on schedule–here’s how:
When selecting an AP software solution for your construction company, here are a few things to consider.
Bonus Tip: Prepare your team with education and training. Learning new processes and platforms takes time. Improve your turnaround time by providing effective training and access to educational resources to make the transition easier for your team.
Once you implement automation into your AP process, it can feel overwhelming to research all the ERP and accounting software options available to you. However, the most important thing to look for is construction-industry-specific software.
To help you get the process started, we’ve identified three key contenders in the market, and highlighted some of the features that make them worth investigating.
Sage is one of the most well-known (and oldest) ERP solutions on the market. While offering resource planning software for a multitude of industries, they’ve created Sage Paperless Construction, a trade-specific installment promising to “simplify process from project start to finish” with:
While its established reputation can be appealing, it’s important to remember that Sage’s size makes it harder to get ahold of timely support and means a much less personalized experience. Additionally, it only integrates with other Sage products.
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Having acquired the well-established construction-industry-specific software, TimberScan in 2021, AvidXchange promises to streamline and centralize AP processes with features like:
While favored by many for its user-friendliness and value for money, users also report problems with image distortion and compatibility issues–especially when the software updates.
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hh2's software solution offers the same features (plus some) and we do it better. For example, hh2’s Doc Flow offers an easy and accurate way to:
Along with a variety of solutions that adapt to all aspects of the AP ecosystem, hh2 is ideal for adapting…
The nuance of compliance standards and the need for flexibility requires automated AP software specifically designed for the construction industry. Hh2 is a specially developed construction ERP management solution built by construction professionals for construction professionals.
Whether you’re a general contractor, HVAC, or anything in between, our deep knowledge of your industry gives you a platform you can trust to keep your company compliant and organized. Here’s how:
An All-In-One Solution That Seamlessly Integrates with Your Current Stack
hh2 supports every branch of the construction industry, including:
Our construction software integrates with most major Enterprise Resource Planning solutions:
But does construction-specific ERP make a difference compared to more generalized alternatives?
If all the reasons above haven’t convinced you, then we invite you to hear from real hh2 customers about how features like Data Drop, Document Flow, and beyond helped solve their construction accounts payable problems.
"It's a great feeling to be able to recommend a product like hh2 that we've had very good success with. We love using it today and plan on using it in the future as we grow!"
– Bryan Kelling | Controller | Metro Air Conditioning Company
Data, stats, and scenarios help build a foundation of understanding the value of construction accounts payable automation, but actual real-life accounts from construction companies like yours bring everything to life. Check out these three case studies that show how automation can revolutionize your business–no matter the size.
GW Peoples Contracting Co. Needed to Level Up its Invoicing Process
Adam Lutz, Controller at GW Peoples Contracting Co, struggled with managing, approving, and tracking invoices. Here’s how hh2 helped revolutionize its process.
Old Payroll Processes Were Haunting the Dreams of Hess Construction’s Accountant
Lorraine Searcey, Accountant at Hess Construction, needed a better payroll system, “Entering payroll [manually] was a nightmare.” Watch her full story about how hh2 changed all that.
Paper Invoices Cost Metro Air Conditioning Company Time and Money
Brian Kelling, Controller at Metro Air Conditioning Company, hated the risks associated with dealing with paper invoices. They were slow to receive and slow to process. Here’s how hh2 helped his company make invoice processing smoother, faster, and easier.
We hope this guide helped voice the trials of construction AP management that you deal with every day, as well as introduced solutions and strategies that you can implement for a more peaceful and productive accounting workflow.
From accuracy, organization, and compliance to faster and easier AP, an industry-specific, cloud-based solution can improve the efficacy of your business and the quality of life for everyone inside and outside of your organization.
To learn more about any of the tips, strategies, stories, or features covered in this guide, visit hh2.com.
Book a free demo with one of our hh2 AP experts today. We’re always here with exceptional software–and personalized support to help you achieve your short and long-term goals.