There are a few aspects of today’s society that have not been optimized by technology in some way. If something needs to happen, it has either already been automated or somebody is trying to figure out how to develop that automation. For financial issues, and specifically receivables management and tracking and payment management, this technological assistance and automation is generally provided through either on-site or cloud-based software platforms.
Specifically, software platforms have been developed that enable contractors to manage projects, secure extensions of credit, track deadlines, manage relationships/customer contact, and monitor and manage receivables and payment. This tech revolution is a welcome change from the days of hand-written ledgers and Excel spreadsheets, but the use of these tools in the construction industry lags far behind the use of technology in other industries.
Technology Implementation is Important – But The Construction Industry Is Behind
In an industry with thin margins and a history of payment problems, losing the efficiency battle can quickly lead to problems competing in the marketplace. Technological platforms not only exist to assist with the construction financial management process as a whole, they also provide specifically targeted and valuable assistance in managing receivables and creating and implementing a thorough payment funnel. Maintaining a secured position on construction projects is the best way to guarantee payment, and that function can be monitored and implemented by software platforms at a rate never before seen in the industry. On the flip side, however, the failure to adopt new technology like this when available can have dramatic consequences. Companies that put off implementing new technological advances available to their industry run the risk of falling behind competitors with the respect to the tools used, and falling behind those competitors’ subsequent efficiency gains. In an industry with thin margins and a history of payment problems, losing the efficiency battle can quickly lead to problems competing in the marketplace.
Standing out from the crowd can sometimes be a good thing, but that is not the case when it comes to a failure to adopt a game-changing technology. What happened to companies that didn’t adopt the internet back in the 1990s? Having some web presence is compulsory, and the companies that chose not to embrace that new development quickly learned that was a mistake.
Construction Industry’s Current Adoption
Despite the very real hazards of failure to adopt technology, the construction industry still lags far behind other industries in this regard. In fact, construction companies only spend 25% of what companies in other industries spend on technology. This is not optimal and provides evidence that there is a needed change that must occur in the construction sector, but it also defines an opportunity – nobody in the construction industry has missed the boat completely.
nobody in the construction industry has missed the boat completely. According to a recent survey by JBKnowledge, most construction companies use some sort of accounting software; but the vast majority of those are using software that doesn’t communicate with their other programs. In fact, fully one-third of the 85% of construction companies using “accounting software” are only using Microsoft Excel. Client Relationship Management (CRM) Technology use is similarly proportioned. While only 21% of the construction companies surveyed use CRM technology, one-third of those that did use only Microsoft Excel.
This over-reliance on Excel continues to monitoring receivables, with the same problems. While Excel is a useful product, it’s the wrong tool for construction financial managers – especially as it’s being forced into a de facto platform, a function for which it is not designed. Among other issues, it’s too general, it’s not collaborative, it results in multiple spreadsheets with no ability to tie that data together, and in some cases, there is just too much data to reliably and consistently track with a spreadsheet.
Receivables Monitoring Technology Is Better Than Excel
To really provide clear and tangible benefits, a receivables monitoring solution for the construction industry should be able to perform several key functions. It should 1) provide good access to your information; 2) be able to store and intelligently display your data; 3) be able to communicate with other software applications; and, potentially most importantly, 4) monitor and track security rights and the steps needed to remain in a secured position. Monitoring receivables is all about getting paid, and nothing prompts payment more efficiently than remaining secured in all extensions of credit.
Cloud-Based Solutions Are Re-Inventing Construction Receivables Management
The technological revolution in construction receivables management is happening, and it’s happening in the cloud. The benefits to cloud-based technology are real, and they line up neatly with the requirements of a thorough construction receivables monitoring solution outlined above. Cloud-based solutions are agile, communicative, clear, attractive, and powerful.
With cloud-based solutions, a company can connect products through APIs, and with products that talk to one another, the financial manager can do away with double data entry for good. What’s more, cloud-based solutions are formulated specifically to provide easy access to all of your information from wherever you are. If you have an internet connection, you should have access to all of your data – and if you don’t something is wrong. Finally, cloud-based solutions are powerful as well as pretty. Ugly applications can be functional, but when your important information is presented a clear, attractive, and thoughtful manner, it’s easier to make sense of it and get paid.