How the right tech can help you manage outgoing cash

Construction projects have a lot of moving parts – from labor to materials to equipment and a host of suppliers and stakeholders to manage, it can be difficult to stay on top of everything.

However, as a construction financial professional (CFP), you need to have insight across the business to effectively managing outgoing cash.

This critical function helps ensure your business is able to meet all of its financial obligations and remain profitable.

Essential financial tasks such as cash forecasting, budgeting, invoicing, and expense management can help a business better manage its outgoing cash.

However, when these tasks are performed manually, they are often tedious, time-consuming, and error-prone. Luckily, there’s a better way.

Technology, particularly the use of a financial management system integrated with pay-app software, can help CFPs streamline tasks, boost productivity, and gain greater financial insights.

In this article, we will cover:

1. Why construction companies need a strong technology backbone
2. The benefits of pay app software
3. Why integration is key
4. Final thoughts

A strong technology backbone

Technology can play an integral role in helping you manage outgoing cash by providing tools and platforms that automate and streamline financial processes.

It is essential to have the right software solutions in place – that begins with implementing a robust ERP system. A construction ERP system enables one source of truth with real-time views of project and financial status.

This level of visibility helps teams effectively track projects and their components so they can identify opportunities as well as risks and act quickly if an issue arises.

Your solution should include accounting and financial management capabilities or integrate with a financial management system.

Having a solid financial management solution can help you track expenses, create invoices, manage payroll, and other important tasks.

When these functions are automated, you have a clear and real-time picture of your financial performance, so you can make more informed decisions about managing cash flow.

Project management software can be integrated to provide further capabilities such as tracking project budgets and expenses in real-time, so you can see how each project fits into the bigger financial picture.

Selecting cloud-based solutions ensures you and your teams have access to project and financial information from any location, at any time.

It also helps improve communication and collaboration, so everyone is up-to-date on how projects are progressing financially, so they can make the best decisions around cash management. Cloud solutions also deliver greater speed, agility, and adaptability.

Benefits of pay app software

Manual processes have long troubled the construction industry. In fact, 35% of construction professionals’ time is spent on non-productive tasks like looking for information and redoing work.

Payment management software is becoming more popular in construction as businesses look for new ways to eliminate inefficiencies and streamline processes.

Payments can be cumbersome when managing numerous subcontractors and piles of paperwork. Payment application software digitizes the paperwork and provides immediate visibility into cash flow.

Payment application software offers a host of other benefits. It can help businesses process payments electronically, speeding up the payments process, improving cash flow, and reducing administrative time and costs.

It can also automate invoicing and provide real-time visibility into payment status, so you can quickly see which invoices have been paid and which are overdue or still outstanding. Pay app software also provides secure transactions with encryption and other security measures for an added layer of security.

And with mobile capabilities, all of these features can be accessed through your mobile device anytime, anywhere.

Additionally, with payment application software, your construction business can:

• Create jobs based on the projects in your ERP

• Push subcontractor commitments and change orders automatically

• Ensure compliance and avoid unnecessary adjudication

• Eliminate posting errors and omissions

• Reduce processing time

• Ensure billing values never exceed contract amounts

• Guarantee the receipt of lien waivers

Integration is key

When selecting the best ERP, financial and project management, and payment solutions, it is critical that they are integrated.

You will not gain all the benefits the technologies offer if your data is siloed in separate systems. Integration ensures that your data flows seamlessly between solutions, eliminating the need to manually re-enter information, which is a tedious and error-prone process.

When payment application software is integrated with your other solutions, you not only benefit from streamlined processes, but you can improve your pay app process, get paid faster, prevent over billings, and make sure all paperwork is submitted in a timely manner.

The transfer of critical financial data between your solutions is automated, helping to eliminate common issues such as math errors, unapproved change orders, missing lien waivers, manual entry errors, and expired compliance documents.

Final thoughts

Effectively managing outgoing cash in construction is essential. When not managed properly, it can derail a project and erode your profit margins.

Utilizing the right integrated solutions, including a robust ERP and payment application software, can help streamline processes and give you peace of mind that all of your critical financial data is accurate and current.

Plus, the time savings gained by not having to manually re-enter data can allow teams to take on more projects without having to add headcount.

Businesses that can do more with less will prosper and have an advantage over the competition.

Editor’s note: This article was first published in April 2023 and has been updated for relevance.