Businesses across all sectors are implementing measures to keep staff safe and employed, and are working to develop business continuity strategies in a rapidly changing and uncertain COVID-19 environment. The construction industry is working to address these critical priorities while also grappling with increasing supply chain issues, labor shortages and financial impacts fueled by the coronavirus. Already operating on razor thin margins, construction firms are looking for ways to manage cash flow to help weather the crisis and keep the doors open.
Cash is the lifeblood of any business and becomes increasingly critical for construction firms as fallout from the pandemic causes projects to be cancelled or put on hold. As the crisis continues to unfold, cash flow management strategies can help construction firms remain viable in a very challenging environment. Companies can leverage digital accounts payable technology to protect and manage cash flow.
Automating accounts payable
Automating accounts payable (AP) can help construction firms streamline the AP process, better manage the hundreds of invoices associated with each project and save staff time and resources.
Construction AP solutions can eliminate much of the paper generated by the many moving parts of construction projects. These solutions allow construction firms to view all of their payables on a dashboard, monitor cash flow and gain clear visibility into the financial health of the firm. Good cash flow management can help companies avoid late fees or even the need to take on debt to settle payables.
Automating payments can also help firms protect cashflow, better manage the bottom line and reduce operating costs. According to one study by Sterling Commerce, accounts payable automation software can result in cost savings of up to 90%. Cutting costs is a win for firms at any time but is especially critical as firms navigate the COVID-19 crisis.
Encouraging contractors, suppliers and vendors to accept electronic payment
Construction firms can accelerate the acceptance of electronic payment among suppliers, contractors and vendors by helping them understand that electronic options are low to no cost and provide the added benefit of getting them paid several days faster than a paper check that goes through U.S. mail, which takes days to deposit and clear.
Firms can make this shift to electronic payments permanent by letting contractors and suppliers know that they won’t be using costly and inefficient paper check processes post-COVID to improve the process and gain flexibility in payments to better manage cash flow. This will lead to faster invoice approval and fewer late payments, which, in turn, can help maintain and improve relationships with subcontractors, suppliers and vendors.
Generating new cash flow
Firms can leverage intelligent payment network technology to use credit cards to pay any supplier regardless of whether the supplier can accept cards. This payment option allows firms to generate new cash flow with 30 days of float. Using this option, firms can also take advantage of the benefits of their bank-issued credit cards such as earning cash back and using points rewards to pay suppliers.
Keeping the AP process running smoothly
The COVID-19 crisis is, unfortunately, causing many companies to furlough or let go longtime administrative team members. Reduced in-person staff availability makes it all but impossible to track invoices and submit on-time payments, especially as this crisis worsens. This will be exacerbated by suppliers’ pressure to be paid faster to keep afloat.
Firms can reduce their reliance on staff-intensive manual AP processes by using a digital approach to pay suppliers on time and in the way they prefer. This approach can provide companies with a better way to handle payments and cut costs and even receive rebates on some transactions.
These solutions can also help firms support remote working office staff. Instead of having to go into the office to review a payment or handle a supplier inquiry, technology allows firms to do this remotely, protecting employees, while keeping the AP process running smoothly from any location. Teams working remotely due to COVID-19 can stay on top of the firm’s payment obligations, manage supplier relationships, and ultimately mitigate risk throughout this crisis and in the future.
As construction firms work to protect their employees, manage cash flow and keep the lights on, technology such as digital AP solutions can help them weather the crises and introduce efficiencies to remain viable and competitive well into the future.
