It's no secret that the construction industry faces a tone of challenges. Usually, we tend to think about the economic context, with elements such as inflation influencing material costs, thus impacting demand. Labor shortages are also a recurring topic, where it becomes necessary to replace veterans in the field while adjusting wages to keep pace with rising inflation. Climate change could also be seen as a major challenge, as companies are increasingly forced to meet government environmental standards.
 
However, what we tend to overlook is the depth of the impact of these challenges on the industry as a whole. All departments are affected, and each individual feels the repercussions differently in their day-to-day work.

Today, our intention is to explore the financial realm of the construction sector and understand the challenges faced by finance professionals. We're talking here about accountants, controllers, analysts, even people who aren't in the department, but who are involved in the transaction approval process. The aim of this article is to shed light on how automation can metamorphose financial management in the construction industry, offering support to financial resources in meeting the challenges they face.

The main challenges

One of the main challenges facing the accounting department is the fact that payment cycles are long. This is due to a variety of factors, and often results in considerable payment delays.

So, what causes these delays?

Delays can be caused by a variety of factors, such as extreme weather conditions (floods, snowstorms, ice storms, etc.), ongoing litigation, changes in regulations, or even product stock-outs (we experienced this seriously during Covid). Whatever the reason, these delays give rise to a whole range of problems.

Late payment can lead to tensions with suppliers, who may reduce credit terms, impose late payment penalties, or even refuse to supply goods or services to the company.

Prolonged payment cycles add to the workload of the accounts payable department. Teams are faced with increased management of communications with suppliers, handling payment exceptions and allocating more time to resolving late payment disputes.

It's well known that an overload of work, combined with long backlogs, increases the risk of human error in processing.

In short, it's clear that this goes beyond a simple "delay". The butterfly effect is clearly at work.

Another challenge faced by our customers in this sector is that their processes remain largely paper-based, and are not necessarily aligned with the latest technological advances. Of course, there are reasons why they are struggling to adopt more modern practices.

The complexity of contracts, and by extension the billing process, makes it difficult to consider a more efficient way of operating. Administrative documentation in the industry can be complex and detailed, often requiring handwritten signatures. This has sometimes led to the persistence of paper documents for legal and regulatory reasons.

It's also important to remember that many construction companies have been in business for decades. They may be reluctant to change their working methods, especially if these have been effective in the past. This resistance increases, especially when employees have been working the same way for a long time. We're talking 20, 30, even 40 years. As retirement approaches, the prospect of learning new ways of working can be a source of stress. And understandably so. 

Finally, many construction companies are putting the brakes on bringing technology into their administrative work methods, since construction sites can be difficult environments for the use of electronic devices due to dust, dirt and the risk of damage. Although the technology integrated into offices is not impacted by these factors, a complete vision of automation of accounting processes could benefit from the availability of certain technological elements for employees on construction sites.

The benefits of accounts payable automation

In the past few years, however, there's been an acceleration in the adoption of technology in the construction industry. Companies are increasingly investing in project management software solutions, online collaboration platforms and mobile applications to facilitate processes and improve efficiency. They are also increasingly considering the adoption of technologies that automate their accounts payable.  

And there are several reasons why!

The one that comes to mind first is time savings. Automation enables invoices to be processed quickly and efficiently, reducing the time needed to perform accounts payable tasks manually. When you save time, chances are you save money too. 

Labor costs are probably one of the biggest costs a company has to pay. And rightly so. Think of it as a muscle - the stronger you make it, the harder it works. However, there has to be a certain level of profitability. In every job, there are redundant tasks that don't require any particular ability to perform. It's this kind of task that's worth automating, as you free up your resources' time to concentrate more on value-added tasks for your organization.

1. The process itself: ok, I know I said "specifically", but literally the launch of the process itself can be automated. As soon as your invoices are received by e-mail, the process starts. There's no need to take action, it just happens. If you receive a paper invoice, simply scan it and send it to your billing email.
   
   
2. Validation: you have a purchase order, an invoice and a receiving slip to link together to make sure everything is in order? It's a task that can be automated, and when there's a discrepancy, you're notified.
   
   
3. Approvals: if you have business rules that require different levels of approval, or you have a few people in your organization who need to sign off before accepting a transaction, the approval process is virtually automatic. Everyone who needs to approve receives a notification. Once all parties have approved, the process continues. So technically, you don't have to nag your colleagues to take action - our solutions do it for you!
   
   
4. Data entry: once the invoice has been processed, all entries are made automatically in your accounting software.
   
   
5. Archiving: when the entire process is complete, the documents are archived on your digital platform, according to the tree structure you assign to them. This is particularly useful for research and audit purposes. Find all your documents with a single click.

In the same vein of dividing up tasks to optimize costs, another advantage of automating accounts payable is cost reduction. Automating accounts payable can help reduce the administrative costs associated with manual invoice processing, document archiving and potential errors. 

Costs can also be reduced by speeding up the payment process. Automation helps to improve cash flow management by ensuring that payments are made on time and avoiding unnecessary delays. So it's an effective way of ensuring good relations with suppliers, and maintaining a good reputation. 

We could also elaborate on how automation helps with compliance, reduces human error, and promises great organizational scalability. 

In short, the benefits and possibilities of automation are truly endless.

Our solutions 

We've piqued your curiosity? At XMA Solutions, we see digital transitions as a strategic advantage. We support you in the implementation of your automation projects, in order to reduce your costs, optimize task distribution and promote efficient collaboration, all facilitated by a simplified integration. 

Contact us today for an exploratory meeting.