Transforming Invoice Processing for Construction Success
The construction industry is one of the most dynamic industries, yet it has historically been slow to adopt technological advancements, such as automation. Accounts payable, in particular, has traditionally been a manual and time-consuming process for the construction industry. However, with the increasing demand for efficiency and cost-effectiveness, construction companies are beginning to see the benefits of automating their accounts payable process. In this blog, we will explore the benefits of automating accounts payable in the construction industry and how it can improve a company’s bottom line.
1. Improved accuracy and efficiency
Manual accounts payable processes are prone to errors. The construction industry deals with a large volume of invoices, and without automation, mistakes can occur when entering data manually, leading to delayed payments and unhappy vendors. According to a study by The Hackett Group, the average cost of a single invoice error is $53, which can quickly add up for construction companies that process hundreds or thousands of invoices each year. By automating accounts payable, construction companies can eliminate the risk of human error and improve the accuracy and efficiency of their invoice processing.
In addition to accuracy, automation also speeds up the accounts payable process. A report by the Institute of Finance and Management (IOFM) found that automated invoice processing can reduce invoice processing time by up to 80%. This translates to faster payment processing, which can help construction companies establish better relationships with vendors and improve cash flow.
2. Better cost management
The construction industry is known for its slim profit margins, so cost management is crucial to staying competitive. Automating accounts payable can help construction companies better manage their costs by reducing the cost of invoice processing. According to IOFM, the cost to process a single invoice manually can range from $12 to $30, while the cost to process an invoice through automation can be as low as $3.
In addition to cost savings on invoice processing, automation can also help construction companies capture early payment discounts. According to a report by Ardent Partners, 72% of early payment discounts are missed because of inefficient manual invoice processing. By automating accounts payable, construction companies can take advantage of early payment discounts, which can add up to significant cost savings over time.
3. Enhanced visibility and control
Manual accounts payable processes can be time-consuming and lack visibility, which can lead to delays and missed payments. With automation, construction companies can have better control and visibility over their accounts payable process. Automation software can provide real-time updates on invoice status and payment processing, allowing construction companies to have a better understanding of their cash flow and make informed decisions.
In addition to better visibility, automation also provides enhanced control over the accounts payable process. Automation software can establish approval workflows and set up payment schedules, ensuring that payments are made on time and in compliance with company policies and regulations. This not only helps to prevent payment delays but also reduces the risk of fraud.
In conclusion, the construction industry can benefit greatly from automating its accounts payable process. Automation can improve accuracy and efficiency, reduce costs, and enhance visibility and control. By automating accounts payable, construction companies can improve their bottom line, establish better vendor relationships, and stay competitive in a challenging industry.