By: Rich Uphus | February 28, 2023
Challenges in managing supplier invoices have long plagued the construction industry. Late invoices can cause significant problems, leading to payment delays and reduced cash flow. A survey by the National Contract Management Association (NCMA) showed late payments are one of the biggest problems subcontractors face in the construction industry, with 63% of respondents reporting that they have experienced late payments (NCMA, 2019).
One of the biggest challenges of managing suppliers who do not submit their invoices promptly is chasing down late invoices. This can be time-consuming and often repetitive for Accounts Payable (AP) staff, taking up valuable resources that could be used for other essential tasks. According to a survey by the Construction Financial Management Association (CFMA), over 50% of construction companies experience difficulties collecting invoicing from suppliers on time, with an average delay of 30 days. This can lead to cash flow problems, delayed project completion, and strained supplier relationships. This can result in a backlog of invoices, reducing the company's efficiency.
Another challenge of manual supplier management is the risk of double billing. When invoices are not submitted on time, it can be difficult for accounting to ensure they have received all the invoices for a particular purchase order (PO). This can result in the company paying twice for the same goods or services, which can be costly and time-consuming to rectify.
To avoid these pitfalls, construction companies can transition to an automated process in the cloud. Automated processes provide many benefits over manual processes, including:
- Automated Invoice Generation: Automated supplier management software can automatically generate invoices for suppliers when a PO is completed, avoiding the risk of chasing down late invoices and double billing. This helps companies avoid the pitfalls of manual supplier management and ensures that invoices are submitted promptly.
- Increased Efficiency: Automated supplier management software eliminates the need for manual data entry, reducing the risk of errors and increasing accuracy. This reduces time and effort for AP staff and frees up resources for other essential tasks.
- Real-Time Visibility: Automated supplier management provides real-time visibility into the invoices received and payable. This makes tracking payments easier and ensures they are made on time, reducing the risk of late payments and double billing.
- Improved Accuracy: Automated processes are more accurate than manual ones, reducing the risk of incorrect calculations or mismanagement of funds. This increased accuracy helps companies make informed decisions and maintain a clear financial picture.A study by the Construction Financial Management Association found that construction companies that utilized automated supplier management experienced a 50% reduction in payment processing time and a 25% reduction in payment errors. The study also found a 15% reduction in the risk of fraud compared to those using manual processes.
Late supplier invoices can cause significant problems for construction companies, leading to delays in payment, reduced cash flow, and increased risk of double billing. However, transitioning to an automated process in the cloud can solve these challenges, reducing payment processing.
FullClarity Construction for NetSuite
FullClarity Construction for NetSuite provides an automated cloud solution for today's challenges in supplier management. With its seamless integration into NetSuite, construction companies can benefit from its automation and real-time visibility to streamline supplier tracking and reconciliation, reduce the risk of manual errors, improve cash flow, and maintain good relationships with suppliers. The result is a more efficient, accurate, and streamlined process that helps companies stay ahead of the curve. FullClarity Construction for NetSuite is the solution construction companies have been searching for to overcome the limitations of manual processes and drive greater efficiency.
If your construction company is looking for a way to administer its contracts better, FullClarity wants to speak with you. Contact us to arrange a no-obligation consultation with one of our experts.