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Faster Month-End Close: How Invoice Automation Makes It Possible

The end of the month often brings a flurry of activity in the finance department, with teams racing against the clock to close the books.

This period, known as the month-end close, is crucial for accurate financial reporting and business decision-making.

Yet, traditional manual and spreadsheet-based processes can often make you want to throw your laptop out the window — tedious, slow and prone to errors.

Enter invoice automation — a game-changer for speeding up the month-end close process.

In this article, we’ll explore how invoice automation can transform your month-end, making it faster, more accurate and ultimately less stressful. Ready? Let’s dive in.

The hidden AP issues delaying your month-end close

When it comes to closing the books at the end of the month, accounts payable (AP) often presents hidden issues that cause significant delays. For construction businesses, these challenges can be even more pronounced:

👉 Manual data entry

Traditional AP processes are heavily reliant on manual data entry. Each invoice needs to be manually input into your system, which is not only time-consuming but also prone to errors.

These mistakes can lead to significant rework, further delaying the month-end close.

👉 Approval delays

Invoices typically need to go through multiple levels of approval before they can be processed for payment. In a manual system, this means physically routing invoices from one person to another, which can create delays.

If approvers are unavailable or the process isn’t clearly defined, these delays can pile up, extending the month-end close process by weeks.

👉 Lack of visibility

Without real-time visibility into the status of invoices, it’s difficult to keep track of where each invoice is in the process. This lack of visibility can lead to invoices being overlooked or delayed, causing bottlenecks at the end of the month.

You need a clear view of which invoices have been processed, which are pending approval, and which have discrepancies that need to be addressed.

👉 Disparate systems

Many construction companies manage their finances using a mix of accounting software, spreadsheets and paper-based systems. This fragmentation makes it challenging to consolidate information quickly and accurately.

When data is scattered across different platforms, pulling it all together for the month-end close becomes a slow and error-prone task.

👉 Volume of invoices

Construction businesses deal with a high volume of invoices from various suppliers, subcontractors and service providers. Each invoice needs to be reviewed, verified and processed. When done manually, this process can be incredibly time-consuming, especially if there are discrepancies that need to be resolved. Phew!

Aerial birds eye image of the frame of a house being built on a construction site at sunset - Wooden floor and walls are visible

 

The benefits of a faster month-end close

Having a faster month-end close isn’t just about saving time; it brings a host of other benefits that can significantly impact your construction business. Here’s why speeding up your month-end close is a game-changer:

1. Faster clarity on costs

One of the biggest advantages of a quicker month-end close is gaining immediate clarity on your costs. With all invoices processed swiftly, you get an up-to-date view of your expenses.

This real-time insight helps you make informed decisions about your budget, ensuring you stay on top of your financial health. No more waiting weeks to see where your money went — you’ll have the full picture right when you need it.

2. Better resource allocation

When you close your books faster, you free up valuable time and resources. Instead of spending days or even weeks bogged down in paperwork, your finance team can focus on more strategic tasks.

This means better resource allocation across the board. Your team can work on optimising budgets, planning future projects, or analysing financial performance — all activities that drive business growth.

3. Boosted team morale

Let’s face it, no one enjoys the crunch time of month-end closes. By streamlining the process, you reduce the stress and workload on your finance team. Happier employees are more productive and engaged, which contributes to a healthier workplace environment and better overall performance.

4. Stronger vendor relationships

With faster invoice processing, you can pay your vendors on time, every time. This reliability strengthens your relationships with suppliers, leading to better terms and potential discounts. A reputation for timely payments can also make you a preferred customer, giving you leverage in negotiations.

5. Improved financial accuracy

Speeding up your month-end close with invoice automation reduces the risk of errors. Automated processes ensure that data is entered correctly the first time, minimising the chances of mistakes that could lead to costly rework.

How invoice automation speeds up the month-end close

Ready to make your month-end close a breeze? Invoice automation is here to save the day! Let’s dive into how this game-changing technology can speed up your month-end close and take the stress out of your finance processes:

👉 Eliminating manual data entry

Manual data entry can be a real drag, not to mention error-prone. With invoice automation, you can say goodbye to the tedious task of entering data by hand.

Invoices are automatically captured and processed, ensuring that all information is accurate and up-to-date. This not only saves you time but also reduces the risk of costly mistakes.

👉 Streamlined approvals

Chasing down approvals can feel like herding cats. Invoice automation streamlines the approval process by creating automated workflows. This means you get a clear audit trail, and you can see exactly who’s holding up the chain. With automated notifications and reminders, invoices move smoothly through the approval process, cutting down on delays.

👉 Automated matching and validation

Matching invoices to purchase orders (POs) manually can be incredibly time-consuming. With invoice automation, this process is automated. Invoices are matched to PO in real-time, and any discrepancies are flagged immediately. This helps prevent over-invoicing, allowing your team to catch errors before they impact the bottom line.

👉 Real-time visibility

One of the biggest perks of invoice automation is the real-time visibility. You can track invoices through the entire payment cycle, from receipt to approval to payment.

This means you always know the status of your invoices, helping you manage your cash flow more effectively and avoid any surprises at the end of the month.

👉 Increased accuracy

Forget about double-checking and rework. Automated invoice processing ensures that data is accurate from the get-go. This means fewer errors, less time spent on corrections and more confidence in your financial reports. With accurate data, you can make better business decisions and close your books faster. That’s helpful!

👉 Enhanced compliance

Compliance is crucial, especially in the construction industry. Invoice automation helps you stay on top of regulatory requirements by enforcing approval limits and maintaining a clear audit trail.

You can set limits for approvers, ensuring that all transactions are within the correct parameters. This reduces the risk of non-compliance and keeps your financial processes in check.

Nightscape of Wellington City, New Zealand

 

Case Study: McKee Fehl’s success with invoice automation

McKee Fehl, a New Zealand-based construction company, is renowned for completing challenging projects on time and within budget. Their portfolio includes notable industrial and commercial redevelopments.

Initially, McKee Fehl’s system for managing approvals and payments was almost entirely paper-based, leading to a 6-week delay in invoice processing. With Lentune’s invoice automation, they transformed their accounts payable turnaround from 6 weeks to just 3 to 5 days.

The system’s recognition technology and ability to route invoices for approval have greatly enhanced efficiency. Staff quickly embraced the new system, appreciating its ease of use and the significant reduction in errors.

Lentune’s support and customization have been excellent, providing a user-friendly interface and tailored workflows that perfectly fit McKee Fehl’s needs.

Wrapping it up

Invoice automation is a game-changer for construction businesses looking to speed up their month-end close.

By eliminating manual data entry, streamlining approvals and providing real-time visibility, it transforms a tedious, error-prone process into a smooth, efficient one.

As seen with McKee Fehl, adopting invoice automation can dramatically reduce turnaround times and improve overall financial management.

Ready to revolutionise your accounts payable process? Embrace invoice automation and experience a faster, more accurate and less stressful month-end close.

How we can help

At Lentune, we’re all about helping construction companies streamline their project finances. Our project cost management and automation tools save you money, improve cash flow and boost productivity. We’d love to show you how it works!

In just 3 minutes, our recorded demo will show you how our invoice automation module can streamline your workflow, giving you more time to grow the business

 

 

FAQs: Construction Month-End Close

How long should the month-end close process take?

The time it takes to complete the month-end close process varies depending on the size and complexity of your construction business. While some companies can close their books in 3–5 days, others may take up to two weeks.

With proper procedures and automation, you can significantly reduce the time it takes to close the books at month-end.

Why does the month-end close matter in construction?

The month-end close is crucial for construction companies as it provides a clear, accurate picture of financial health enabling informed decision-making.

Timely and precise month-end closes help identify cost overruns early, ensure accurate budgeting, and maintain cash flow. They also strengthen relationships with vendors by ensuring timely payments and enhancing compliance with regulatory requirements.

Efficient month-end closes reduce stress on finance teams and boost overall productivity, setting the stage for better project management and profitability.

In short, a well-executed month-end close is the backbone of financial stability and growth in construction.

What are some unique challenges in the construction month-end close process?

The month-end close process in construction comes with some unique challenges that can complicate accurate financial reporting and decision-making:

  • High volume of transactions: Construction projects involve numerous transactions from various suppliers, subcontractors, and service providers, making it difficult to track and reconcile all expenses.

  • Complex contracts: Construction contracts often have intricate terms and conditions, including variable costs and milestones, which add complexity to financial management.

  • Disparate systems: Many construction companies use a mix of manual processes, spreadsheets, and different software systems, leading to fragmented data and time-consuming consolidation efforts.

  • Approval delays: Multiple layers of approval are typically required for invoices, which can cause significant delays if not managed efficiently.

  • Manual data entry: Reliance on manual data entry increases the risk of errors and rework, slowing down the closing process and affecting accuracy.

  • Project-specific financial management: Each construction project may have unique financial requirements, making standardisation of processes challenging.

Addressing these challenges through automation and streamlined processes can greatly enhance the efficiency and accuracy of the month-end close, leading to better financial control and project management.

What are the risks of an inaccurate or delayed month-end close?

Risks include:

  • Poor decision-making due to lack of timely financial information
  • Cash flow issues from delayed billing or unrecognised expenses
  • Compliance problems with regulatory requirements
  • Difficulty in securing financing or bonding
  • Increased stress and overtime for the accounting team
How can we make our month-end closing process faster?

You can speed up your month-end close by automating data entry and invoice processing, standardising approval workflows, integrating all financial systems and using real-time data analytics. Regular training for your team and continuous process reviews also help.

What’s the difference between month-end close and year-end close?

Month-end close involves reconciling accounts and generating financial statements for a single month. Year-end close, however, includes finalising annual accounts, preparing for audits, and generating comprehensive year-end financial statements, with a greater focus on compliance and long-term financial planning.

What should our month-end close checklist include?

Your checklist should cover:

  • Reconciling accounts
  • Reviewing financial statements
  • Verifying expenses and income
  • Processing all invoices
  • Completing all approvals
  • Communicating with project managers for any outstanding issues
How often should we review our month-end close process?

It’s a good practice to review your month-end close process quarterly. This allows you to identify inefficiencies, incorporate new best practices, and adjust to any changes in your business or accounting standards.

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