Processing accounts payable invoices can be a significant cost for construction businesses that often goes unnoticed. According to MBIE, it costs businesses $18 to process a paper invoice and $16 for an emailed PDF invoice.
For construction businesses still using traditional methods and processing 400 paper invoices per month, that equates to a staggering $7,200 each month!
The primary reason for these costs is the amount of time taken. Think about how long it takes your staff to manually process and input invoice data, match invoices to purchase orders, obtain approval and reconcile payments. Phew!
There’s also the opportunity cost to consider. If your business could reduce the time spent processing invoices, think of what you could achieve with the time saved.
So, how can you free up time for your team to focus on the things that really matter in your business? The answer — invoice automation software.
Invoice automation software captures invoices from your inbox, matches them to purchase orders, and delegates them to the appropriate team members for approval. Once approved, it sends the details to your accounting software for payment.
The best way we can describe it — invoice automation software works like magic!
Signs you need to automate your accounts payable process
1. Frustrated staff
If your business is manually processing more than 400 creditor invoices each month, it’s likely your accounts payable team is finding it tedious and time-consuming.
By automating your accounts payable process, you can free up your staff’s time to focus on more valuable tasks, such as managing vendor relationships or ensuring timely payments.
This can help to maximize the potential of your team, increase their productivity and ultimately lead to greater job satisfaction.
2. Remote work difficulties
In the construction industry, it’s not uncommon to have staff who don’t make it to the head office every day. This makes it crucial to have a digital platform that allows your team to manage your accounts payable from anywhere.
Without a reliable AP platform, it’s likely you’ll have headaches around managing your finances and ensuring timely payments. But invoice automation will help.
3. Struggling to meet deadlines
It’s always a race to meet deadlines in construction. However, there are two types of financial deadlines that can indicate the need for accounts payable automation in your business.
Late invoice payments: If your construction businessis struggling to meet payment dates, even with a healthy cash flow, then it’s likely your AP workflow is too manual or complex. By using invoice automation, you can gain more control and shorten invoice processing times.
Month-end close: If every month it’s a struggle to close your books, then invoice automation can help ease the stress. With an automated AP system that integrates with your accounting software, you can drop data entry and stop double-handling documents.
4. Lack of visibility
You may find it challenging to keep track of the status of invoices, such as the number of invoices awaiting approval or those under query and their reasons.
However, implementing a cloud-based invoice automation platform can provide real-time visibility into your accounts payable processes. With just a few clicks, you can easily access information on the status of your invoices and track their progress throughout the payment cycle.
By having greater visibility into your accounts payable, you’ll be better equipped to make informed business decisions, manage cash flow and negotiate payment terms.
5. Plans for growth
Envisioning your company twice or even ten times its current size may seem daunting. However, it’s essential to consider how you’ll manage this growth and ensure your processes remain efficient.
Implementing invoice automation will help you scale your construction business without the need to hire additional accounts payable staff. With an automated system in place, you’ll be able to handle the increased invoice volume with ease.
Additionally, an intelligent invoice automation platform can provide you with valuable insights into your spending. This will help you to gain a real-time view of project spend and keep projects on budget.
How we can help
At Lentune, we help construction companies streamline the way they handle project finances. Our project cost management and automation tools help you to save money, improve cash flow and increase productivity. We’d love to show you how it works!
In a live demo, we can answer any questions and show you how Lentune could grow your business.
Looking to learn more about Invoice Automation and discover how it can transform your accounts payable? No worries, we wrote "The Ultimate Guide to Invoice Automation for Construction". It's packed with valuable insights that will show you why it's an effective solution for your business.