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IntelliChief

7 Benefits of Enterprise Automation for the Construction Industry

 

Whether you’re a project manager, general contractor, or developer, you understand that successful projects are fueled by the contracts between the various parties involved both on and off the project site. You can’t afford to make payments to a general contractor or supplier without a sound agreement in place. It’s simply too risky. Unfortunately, with so many contractors, subcontractors, and suppliers involved in each project, ensuring that everyone in your network gets their due can be a challenge — unless enterprise automation is integrated into your business processes.

Although contracts are oftentimes considered the lifeblood of the construction industry, the invoices tied to these contracts are equally important — especially when you consider that invoicing works differently depending on the type of construction contract being used (i.e., Fixed-Price, Cost Plus, Time and Materials, Unit Pricing, etc.) What’s arguably even more complex is the process of routing all your invoices to the proper entity, confirming receipts, and satisfying payment obligations. Fortunately, construction industry professionals can streamline their processes with IntelliChief’s enterprise automation solutions.

Enterprise Automation for the Construction Industry

Enterprise automation for the construction industry includes world-class document management and AP automation. In construction, document management that supports project accounting is crucial to keeping projects on track and under budget. Even a single misplaced “0” or misfiled document can send your entire project into a tailspin.

Even though all parties working on a project ultimately play a role in its overall success, they’re equally as concerned with protecting their own best interests. Therefore, when a project is delayed because a dispute has arisen over late payment, it can complicate matters for everyone, especially when timelines are pushed back to resolve a dispute. IntelliChief can improve the speed and accuracy of Accounts Payable invoicing and other crucial business processes to help you take advantage of several benefits, including:

1. Mitigate Risks With Full Visibility Into Your Construction Projects

IntelliChief makes it easy to store and retrieve an array of important project-related documents, including:

  • Contractor Contracts
  • Subcontractor Contracts
  • Change Orders
  • Lien Waivers
  • Supplier Contracts
  • Invoices
  • Purchase Orders
  • Municipal Building Permits
  • Bids and Estimates
  • Plans and Specifications
  • Schedules
  • Code Inspection Documents

This is accomplished by converting your paperwork into electronic files that can be imported directly into your existing Enterprise Resource Planning (ERP) system. Your back-office team will be able to retrieve documents quickly and efficiently without ever being forced to shuffle through a cluttered file cabinet. Whether a document is stored at your office or on-site in a construction trailer, it can be retrieved on-demand as long as the user searching for it has permission. By establishing custom profiles that limit permissions based on your business rules, you can control who can access which documents — even out-of-organization entities. With all your construction documents stored electronically, you gain full visibility into every aspect of your projects, allowing you to glean highly specific insights to help you mitigate risk.

2. Eliminate Noncompliance With Automated Retention Policies

With full document storage and retention policies based on government/state/county regulations, your business can obtain peace of mind whenever an audit is performed. Retention policies are completely configurable to align with your company’s policy and those of the aforementioned regulatory bodies. In most cases, construction-related documents should be maintained for 10 years or longer to avoid any legal or administrative issues. For example, in the State of Florida, a latent defect has a statute of repose of 10 years stemming from the date the defect was (or should have) been discovered. In a case such as this, having the relevant files in storage could mean all the difference. Here’s how it works:

  • Documents are electronically imported into your ERP system
  • You decide how long to save each type of document based on business and regulatory rules
  • IntelliChief manages the file accordingly

The alternative? Purchase space-consuming file cabinets, store all of your paper files manually, hire more processors, and diminish your bottom line with avoidable back-office expenses that could be spent elsewhere — raising worker wages, hiring new talent, purchasing new personal protective equipment, investing in recruiting, combating the labor shortage, and more.

3. Reduce Human Errors and Delays by Automatically Generating Accurate Documents

When your Accounts Payable team is forced to manually enter all of the information from paper documents into your ERP system, every keystroke is a potential error. IntelliChief can virtually eliminate human errors and delays by automatically generating accurate electronic documents using integrated Optical Character Recognition (OCR) technology. OCR can read invoices and pull their information into your ERP system. Then, IntelliChief can help you retrieve these documents using any number of identifiers logged in your index.

4. Improve Your Company’s Cash Flow With Faster Invoice Processing

Managing your cash flow is essential for growing your construction business. If you want to keep your current projects running smoothly while adding new projects to your pipeline, you’re going to need to have an accurate understanding of where you stand in regard to cash flow. IntelliChief can accelerate the invoice review, approval, and payment process to eliminate unexpected charges and prevent billing issues. With IntelliChief Analytics, you can determine financial bottlenecks in your organization and take action to correct them. You can also take advantage of more vendor discounts by paying on time —  every time.

5. Allow Product Manager to Code AP Invoices Remotely

IntelliChief can boost connectivity between project managers and your back-office without the need for shared office space. Project managers can approve invoices, give the green light on purchase orders, and even assign GL codes by project number — all while in the field. They can even attach notes electronically to decrease the number of back-office errors. With remote access, IntelliChief can be utilized on the project site, at home, or in the office to improve your job cost accounting processes.

6. Gain Financial Visibility Into Activity Status for Better Timing and Communications

IntelliChief automates the seamless transfer of key financial data to your ERP system, providing your business with the financial visibility it requires to accelerate timelines and streamline communication between departments. You can track project progress by retrieving invoices to examine payment schedules or identify late payments. Furthermore, IntelliChief can recognize other documents related to a particular project or portion of a project to provide you with a global view of your company’s financial health.

7. Strengthen Relationships With Partners, Investors, and Contractors to Gain Competitive Advantages

The most successful construction professionals didn’t get to where they are today by isolating themselves from the rest of the industry. On the contrary, they worked diligently to form strong bonds with other industry professionals. These bonds give your company a decided advantage over your competitors, but even years of collaboration can be undone by a single payment dispute.

IntelliChief enterprise automation helps your company strengthen relationships with partners, investors, and contractors by facilitating faster payments, more reliable communication, and greater transparency. Your vendors will be pleased with prompt payments, your partners will be relieved to discover that projects are wrapping up on time and under budget, and you’ll benefit from a greater degree of control over the future of your business.

With IntelliChief, you can work smarter, not harder. Grow your business by cutting out repetitive, error-prone tasks and replacing them with industry-leading enterprise automation that understands your company’s processes and helps it achieve its growth objectives.

If you would like to learn more about how IntelliChief helps construction companies save money with intelligent business solutions and AP automation, please contact us today.

 

How to Reduce DSO: 7 Strategies for Better Accounts Receivable Management

You’ve run the numbers, looked at previous metrics, and realized that your DSO is higher than it should be. You may be seeing the impact on your day-to-day cash flow, or you could simply be trying to get ahead of future problems. Either way, you’re looking to reduce your DSO – and the following strategies can help you get there.

Step 1: Set Realistic DSO Targets

In a perfect world, customers would pay right away. But, the reality is, most companies need several days – if not several weeks – to collect and verify their invoices, get approvals, and schedule payments.

To decide on a target DSO, you’ll want to consider the average for your industry, as well as how long it typically takes your company to convert receivables into cash. (This article takes a deeper look at using your DSO as a KPI.)

If your current days sales outstanding is 90+, you won’t be able to get to 30 days overnight. A more reasonable initial goal is an improvement of 10-15 percent. That means reducing your DSO to 77-81 days if you’re currently at 90 days, or getting to 51-54 days if you’re currently at 60. Once you’ve met this initial target, you can re-evaluate your cash flow and decide if you still need to improve.

Step 2: Review Your Payment Terms

A typical guideline for accounts receivable management: your DSO should be within 15-20 percent of your stated payment terms. Once you’ve figured out how much you need to reduce your days sales outstanding, you can re-evaluate your payment terms to make sure they align.

When looking at your payment terms, you’ll want to look at more than just the period of time that your buyer has to pay the amount that’s due. You can also look at:

  • Early payment incentives (such as a 1 or 2 percent discount for paying within 10 or 15 days)
  • Late payment penalties
  • How you’re asking to be paid (electronic options let you access payments right away, instead of waiting several days for a check to come in the mail – although some of your customers might not be willing to adopt new technologies)

One Hundred Dollar Bill

Step 3: Get Better at Credit Risk Management

Your payment terms go hand in hand with your credit practices – which are equally important to consider when you need to reduce your DSO.  If you’re too lenient, you take on a greater financial risk – but if you’re too strict, you may be missing out on potential business.

When you review your credit policy, be sure to consider:

  • Your company’s overall financial risk tolerances
  • What criteria customers need to meet to be approved for credit
  • How you plan to process each application (e.g. using a third-party company for a B2B credit check, or requesting more references from new customers)
  • How you plan to resolve delinquent accounts (from preliminary communications through collections)

You’ll also want to consider whether credit policy changes could actually increase your DSO, rather than reduce it. For instance, if you add more paperwork or more extensive credit checks to your process, you’ll likely spend more time on accounts receivable management upfront. However, if the time you spend on this step is less than the amount of time (and money) you’d spend dealing with delinquent accounts, it may be worth the trade-off.

And remember: you don’t have to decline business from customers you deem too risky. Instead, you can consider options like pre-payment, cash on delivery, or a partial up-front deposit.

Step 4: Improve Your Invoicing Practices

Once you know how you plan to reduce your DSO, you’ll need to communicate your new policies very clearly to your customers. That may mean updating your invoice template to put the due date and preferred method of payment front and center.

There’s also the issue of getting delivered to the customer right away. (After all, if your customer hasn’t received an invoice yet, there’s nothing for them to pay!)

If you currently wait for customers to receive their purchases before you send your invoices, you could start sending invoices after each order has shipped. You could also consider emailing your invoices to speed up the process even further.

There’s also the option of automating your invoices, but we’ll get into automation a bit further on.

Hand and Clipboard

Step 5: Improve Your Collections Practices

Even though most customers pay on time (and those miss the first deadline do usually follow through in the end), companies still need to have a documented debt recovery policy in place. This ensures that you know what to do in a worst-case scenario (and that you spend as few resources as possible on the process.)

One of the most common customer responses on a collection call is “I never got that invoice, can you send it to me?”  Employees then have to get off the phone, reprint the invoice,  re-scan it, and re-email it out.  Implementing an enterprise content management system can give the user access to the invoice while the customer is on the phone, and the customer can receive the invoice immediately.  This allows the AR team an opportunity to come up with a payment plan for the customer right then.

For the most part, one or two friendly reminders are usually enough to get a customer to address an unpaid invoice. (Be sure to keep complete documentation of all your communication attempts – in the event that you do need to send the account to a collections agency, this will make the process smoother.) But, if multiple reminders go unanswered, it may be easiest to turn the account over to the pros. That way, you can go back to focusing on more financially valuable accounts.

Step 6: Increase Visibility

Reducing DSOs is a collaborative effort. Credit managers, financial analysts, and CFOs all have their own role in the process – and they all need real-time information to make more informed decisions.

An unpaid invoice report is a great place to start – but they’ll need to look much deeper to get to the bottom of your high days sales outstanding. Visibility is crucial; your team needs to know which customers are late to pay, whether there’s any correlation with your company’s sales patterns, and whether you’re doing anything internally to hold up the process. If you don’t already have a reporting process in place, consider investing more heavily in a system that’ll let you create a more accurate cash flow forecast.

Step 7: Consider Automation for Effortless Accounts Receivable Management

At the end of the day, managing your receivables is a time-consuming process. Anything you can do to make it easier can have a positive impact on your cash flow.

AR automation is one way that you can speed things up. Instead of having an employee create invoices, confirm each company’s billing information, and print and send your paperwork, you can let an automated system handle everything for you.

Companies that automate their order to cash processes are usually able to reduce their DSOs within a few months. Their customers get their invoices faster, don’t have to worry about duplicate charges, and spend less time contacting customer service. Internally, these companies can eliminate repetitive processes and free up their accounts receivable team to work on more important projects.

Let IntelliChief Help You Reduce Your DSO and Improve Your Accounts Receivable Performance

Ready to improve your approach to accounts receivable management? IntelliChief can help. Our business process optimization team can help you automate your most time-consuming workflows. We’ll recommend ways for you to reduce your DSO, increase your cash flow, and process your receivables with less effort from your team.

Are you ready to work smarter, not harder? IntelliChief can help. For more information, contact us today.