How Progress Claims Software Creates Better Cashflow Management
by Lentune on 2 March, 2023
Progress claims are an integral part of a construction company’s accounts receivable process. They establish a project milestone and payment schedule, which should enable better cashflow management.
However, as with most traditional workflows, the idea is usually better than the execution.
What should make it easier to monitor your money coming in and out is instead often the cause of administrative headaches, confusion and an extensive paper trail.
You must be thinking: “There’s got to be a better way.”
And you’d be right! In this article, we will introduce you to the wonder and cleverness of progress claims software.
Through an automated workflow, you can streamline the progress claim process, reduce processing times, have constant visibility of your claims’ status and make compliance easy.
We’ll get to all this exciting stuff, but first, let’s review the basics.
What is a progress claim?
Progress claims are often referred to by many different names — progress billing, progress payments or progress invoicing. Although whatever you want to call it, the definition is always the same:
A progress claim is essentially an invoice made by a contractor or subcontractor requesting payment for a milestone of work they’ve completed.
The frequency of progress claim payments will depend on the terms of the head contract. However, they are typically made on a monthly basis or after specific construction stages have been completed. For example, after the foundation has been laid.
A progress claim will usually detail all the work that has been completed to date, any materials that have been used and the associated costs. Where needed, it will also include any variations against the original contract.
Once a progress claim has been submitted, the client or head contractor will review it to ensure the work has been completed to the scope of the contract and that the costs are reasonable.
If the client is satisfied with the progress claim, they will then pay the corresponding invoice to the contractor or subcontractor.
Of course, the idea sounds simple in theory, but in practice, it’s a whole different story.
As construction projects are loaded with many moving parts, it becomes tricky and time-consuming to work out what work has been completed, track project spend and know where a claim is in the approval process.
Not to mention, you’ve also got to worry about compliance, retention and other complicated terms.
So, let’s show you how progress claims software makes the whole process easier.
The benefits of progress claims software
1. Streamline the progress claim process
Without automation software, the progress claims process is disorderly, to say the least.
- Quantity surveyors are managing claims in spreadsheets with no consistency and even missing claims.
- That rolls over to the administrative team, who get the headache of trying to piece together the puzzle as they race to meet compliance and payment dates.
- Meanwhile, business owners and CFOs are having sleepless nights over the stress of cashflow and working capital.
So, how does progress claims software fix this?
Simple: Progress claims software puts information on ALL project costs in one place for ALL your teams.
In other words, it’s an all-in-one system that streamlines the claims process for everyone up and down the payment chain.
So, you can stop scrambling through spreadsheets and throw out your paper. Instead, manage all your payment claims, payment schedules, retentions and buyer-created invoices in one digital platform!
2. Reduce time spent on progress claim processing by 78%
According to research by Payapps, construction companies are on average spending 529 hours per month processing 28 claims via traditional methods. That is equivalent to 22 days!
The good news? Progress claim software can reduce this to 112 hours or 4.6 days per month — a 78% reduction in time! This lets everyone ditch the boring admin and refocus on the things that matter.
So, how does the magic work?
- Eliminate double data entry: You save mountains of time by only having to enter data once. At the start of the contract, set everything up and then let the software do the heavy lifting for you.
- Automatic calculation: Manually calculating variations, retentions, margins, payment schedules and claims can be a real time killer. Problem solved — have one clever system that automates these tasks for you.
- Visibility of status: Say goodbye to chasing endless email trails. Always have visibility of your payment claims statuses through intuitive and easy-to-read dashboards.
- Seamless integration: Still manually inputting progress claim data into your accounting software? Progress claim automation software seamlessly transfers your data to your accounting software in one click.
3. Always have visibility of outstanding and approved claims
Previously, viewing the status of a progress claim took flicking through folders, looking at disorganized spreadsheets or logging onto multiple platforms.
With an all-in-one claims system, you can log into a single source of truth and see the status of each project and where the claim is — whether it’s approved, pending or in draft.
This benefit is huge when it comes to reducing stress and gaining a better view of costs. Progress claims software will specifically help you to:
- See project spend as soon as subcontractor claims are received in real-time
- Reduce the stress around cash payments and money received
- Decrease the need for a big working capital
- Ensure accuracy when managing costs and cashflow
4. Progress claims compliance made easy
Both of these pieces of legislation establish key elements that all progress claims must include to be compliant.
Although around 90% of the claims most head contractors and clients receive aren’t compliant due to missing details. When a progress claim is non-compliant, there’s a risk it won’t be paid against or there may be delays in payment.
With progress claims automation software, however, compliance becomes easy as those key details are automatically populated or attached to every claim you create. That means everyone gets paid on time and cashflow keeps ticking over.
Wrapping it up
Progress claims software is an all-in-one system that makes it easy to track, process and approve your payment claims in one place. It eliminates double data entry and saves your entire team time.
What has traditionally been a confusing and time-consuming process becomes simple, fast and manageable with progress claims automation.
Ready to see how it works?
At Lentune, we have developed clever progress claims automation software that helps you manage project costs and gain greater control of your cashflow. In a live demo, we can answer any questions and show you how Lentune could grow your business.