Streamlining Construction Finance: A Complete Checklist

Streamlining Construction Finance: A Complete Checklist

Roughly $10 trillion is invested in construction projects each year, and with so much money involved in the industry, getting a firm grip on finances is something every business must do.

To that end, here’s a blow-by-blow account of what it takes to get your accounts in order, including the tools and techniques that are most useful to construction pros.

Implementing Invoice Automation Tools

Handling invoices manually can feel like trying to juggle with one hand tied behind your back, particularly when you’ve got a multifaceted construction project to oversee. The chief problems are that it’s time-consuming and prone to errors, which can increase project costs by as much as 25%.

That’s where invoice automation tools are immensely helpful, as they can streamline the entire process, saving time and reducing mistakes. This in turn earns customer trust – which is something that one PwC survey found only 51% of business owners feel they have at the moment.

Why Use Invoice Automation?

Think about it: Manually processing invoices often leads to:

  • Lost or misplaced documents
  • Data entry errors
  • Delayed payments

Invoice automation tools eliminate these issues by digitizing the entire process. They capture data from incoming invoices, validate it against purchase orders or contracts, and then push this information directly into your accounting system.

Key Features of Top Invoice Automation Tools

When choosing an invoice automation tool for your construction firm, look for these critical features:

  • Optical Character Recognition (OCR): Scans paper invoices and converts them into editable text.
  • Integration Capabilities: Connects seamlessly with existing ERP systems.
  • Real-Time Tracking: Offers updates on invoice status at any given moment.
  • Approval Workflows: Automates approval processes based on predefined rules.

Popular Invoice Automation Tools in Construction

Some well-regarded tools in the industry include:

  • Procore Financial Management: This integrates financials within project management software, and offers comprehensive visibility over budgets.
  • AvidXchange: This specializes in accounts payable automation, offering up robust workflow capabilities in one fell swoop.
  • SAP Concur Invoicing: This simplifies invoice processing through AI-driven matching technology, and in turn reduces manual intervention.
  • DocuClipper: Capable of scanning invoices, bank statements and receipts, then converting them to the desired format, DoculClipper is a versatile tool that’s well suited to construction projects as well as all sorts of other business use cases.

Best Budget Tracking Apps for Construction Projects

Managing budgets in construction is a perilous process, as every small oversight can lead to significant financial overruns – which impact 91.5% of projects in this sector. But modern budget tracking apps can plug those leaks, giving you the control and clarity needed to stay on course.

Why Use Budget Tracking Apps?

Without real-time budget tracking:

  • Costs spiral out of control
  • Project timelines suffer
  • Profit margins shrink

Budget tracking apps provide a clear snapshot of where your money goes at any moment, enabling better decision-making and tighter financial controls.

Essential Features in Budget Tracking Apps

When selecting an app, ensure it includes these functionalities:

  • Real-Time Data Syncing: Keeps all project stakeholders updated instantly.
  • Customizable Dashboards: Displays critical financial metrics in an easy-to-read format.
  • Integration with Accounting Software: Ensures seamless data flow between platforms.
  • Forecasting Tools: Predicts future expenses based on current spending patterns.

Leading Budget Tracking Apps in Construction

Here are some standout choices for keeping your finances tight and organized:

  • Procore Cost Management: This integrates with Procore’s suite, and offers detailed cost-tracking modules and robust reporting features.
  • Buildertrend Financial Management: This combines budgeting with scheduling, while also providing tools for managing client payments, change orders, and job costing.
  • CMiC Financials Module: This offers comprehensive accounting solutions, and it’s ideal for large-scale projects requiring intricate cost management.

Key Financial Data Handling Techniques

Efficient financial data handling in construction is another fundamental thing you need to get right. It’s like maintaining a piece of machinery—every part must be well oiled and function seamlessly to keep operations running smoothly. 

And since a Buildertrend study from 2022 found that the average delay in a project was over 46 days, with this rising from just 12 days in 2018, a lot of organizations could stand to improve in this regard.

The Importance of Proper Financial Data Handling

Improper handling can lead to:

  • Costly errors and discrepancies
  • Non-compliance with regulatory standards
  • Delayed project timelines due to mismanaged funds

Adopting precise data-handling techniques lets you enhance transparency, accuracy, and efficiency across your projects. The same attention to detail must be applied to all of the information that flows into your organization, as real-time data is very valuable and yet tricky to wrangle.

Best Practices for Accurate Data Management

Here are some top-tier strategies for managing your financial data effectively:

  • Centralized Database Systems: Store all financial information in one place, as this facilitates easy access and reduces redundancy.
  • Automated Data Entry: This minimizes human error through software that captures and inputs data automatically, as we’ve discussed.
  • Regular Audits: Conduct routine checks to ensure compliance with internal policies and external regulations.
  • Access Controls: Limit who can view or edit sensitive financial information based on their role within the organization.

Recommended Tools for Financial Data Management

Consider integrating these tools into your workflow:

  • QuickBooks Enterprise: Tailored for contractors, it offers comprehensive reporting features and seamless payroll integration.
  • Sage 300 Construction and Real Estate (CRE): It provides powerful accounting functionalities alongside project management tools.
  • Jonas Premier Construction Software: It combines robust accounting modules with document management capabilities tailored specifically for construction firms.

The Bottom Line

While we’ve talked over quite a few tools and techniques that will contribute towards a more streamlined, less baggy approach to construction finance, your needs may differ, and so it’s wise to adopt a bespoke approach to get the best end results.

That said, if you’re on top of invoicing automation, budget tracking and data handling, you will already have a head start over the majority of your competitors. The real challenge is sticking to your guns and keeping a level of consistency that is sustainable in the long term.

There are more variables and unforeseen issues in construction than many other sectors, but with firm financial plans, processes and tools on your side, risks will shrink and profitability from projects will rise.


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BDC 318 : Jul 2024