Construction companies need to ensure they can swiftly purchase materials and other supplies to complete their projects and maintain steady cashflows.
Transacting with vendors through paper checks and receiving paper invoices have become more difficult due to postal service disruptions, companies’ shifts to working out of office and financial strains, however. Many corporate buyers are finding that using paper checks increases their accounts payable (AP) expenses unnecessarily as well, and vendors often want to get paid faster than checks allow. These strains are prompting more construction firms to turn to faster, digital means of conducting their B2B transactions.
The November CFO’s Guide To Digitizing B2B Payments report examines how companies are modernizing their AP and accounts receivable (AR) processes for smoother procurement experiences.
Many companies are becoming interested in replacing paper check payments with those conducted via virtual cards or other means, according to Meitra Aycock, senior vice president of corporate payment operations at B2B payments solutions provider Comdata. In a conversation with PYMNTS, Aycock explained how paper checks are becoming less convenient, prompting some buyers to modernize their transaction tools and others to outsource their payments functions entirely.
Firms that are interested in AP tools may still struggle to adopt them, however. A survey of construction sector players found that 43 percent said lack of easy integration among systems was their greatest obstacle to automating AP. This could create demand for solutions that easily link into businesses’ accounts and enterprise resource planning (ERP) systems.
Companies are seeking to update their AP approaches while also wrestling with budget pains due to the economic crisis and reconsidering how much they can afford to spend on technologies. These combined forces could result in the global construction accounting software market growing, but at a slower pace than it otherwise might, and a report projects that it will experience a CAGR of 6.1 percent from 2020 to 2027.
Find more on these and all the rest of the latest headlines the report.
Companies can spend heavily on the process of preparing, printing and mailing paper checks — and these expenses rack up, according to Jeff Freese, CPA and controller at commercial wall system contractor Nevell Group. The process of securing authorizing signatures can also be time-consuming, and vendors often do not want to wait for their funds to arrive in the mail.
In this month’s Feature Story, Freese explained how switching to virtual card payments helped Nevell Group improve cash flow and reduce AP expenses.
Check out the full story in the report.
Many companies are working to reduce their expenses as the pandemic and resulting economic downturn cause budget tightening. Construction sector firms are particularly examining their payment and procurement processes and finding that frictions that were once acceptable are now far more challenging. Eighty percent of construction businesses have reported spending considerable time hunting down late payments, for example, while others report clunky, manual AP processes.
This month’s Deep Dive examines the impact of the pandemic on construction industry AP practices and explores the technologies that could help reduce costs and other challenges.
Read more in the report.
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