Construction payment and compliance management matter now more important than ever. Here are the benefits of construction payment management software.
As in other industries, the pandemic has created challenges in the construction field.
COVID-19 is having quite a negative effect on markets and commercial activity. Operators in the construction field are finding these conditions particularly troubling. Furthermore, things could get worse.
For now, it’s unclear how long the pandemic may last. It’s also uncertain how much of a negative impact COVID-19 might have on society.
It’s difficult to anticipate how recovery may unfold for the construction industry. Additionally, a lack of compliance can lead to hefty fines. However, you can better manage these uncertainties by automating payment management and compliance.
To learn more about construction payment and compliance management in the wake of COVID-19, keep reading.
The Current Environment in the Face of COVID 19
In some instances, construction projects have been canceled. Others have been delayed.
Among the projects still in progress, some construction firms must manage supply chain bottlenecks. These kinds of issues made it even tougher to manage in an already uncertain climate.
However, one group, in particular, is feeling the fallout of the pandemic. Delays and shutdowns are especially troubling for subcontractors.
Subcontractors are exceptionally vulnerable to bankruptcy. A delay of just a few weeks can put some subcontractors out of business.
Government stimulus efforts may help this group. For instance, subcontractors might receive tax breaks or cash disbursements.
These benefits might make the COVID-related slowdowns more manageable for subcontractors. However, the timing of these benefits is vital.
For example, stimulus funds may prevent an unwanted ripple effect. If stimulus funds can keep subcontractors in business, general contractors can avoid a skilled labor shortage in the future.
There’s increasing concern about economic hardships throughout the construction industry. Accordingly, it’s vital that business leaders know what to do during this crisis.
Construction Payment and Compliance Management During an Uncertain Time
The pandemic is creating an increased demand for financial disclosure. Now, project owners expect transparency from construction companies. Also, government officials want to ensure that workers get paid as promised.
Project owners also want to know about the real and forecast impacts of the pandemic on their projects. Most pointedly, they want to know the risks and vulnerabilities tied to their ventures.
For this reason, contractors must go beyond the usual disclosure that’s required in financial statements. Now, you may find that you need to discuss the future impact of your liquidity. You may also need to discuss how stretching your credit to the limit can place a burden on your firm that prevents you from delivering desired results.
For this reason, you must find ways to provide disclosures about project risks during the pandemic. For example, you may need to highlight how COVID-19 can impact current and future judgments.
You’ll also need to provide estimates that are essential for financial reporting. However, these estimates may include how receivables collectability or debt covenants impact projects.
In either case, you must communicate with stakeholders and lenders proactively. By doing so, you can avoid surprises.
For example, this kind of transparency might give you the ability to reschedule lender debt. Transparency might also help you to source alternative funding.
Planning Through the Pandemic
The pandemic continues to unfold. As it does, construction firms are getting hit on multiple fronts.
Still, the way that your company is affected depends on your segment. It also varies based on your position in the construction value chain.
As an example, a large company with government contracts during the pandemic may experience fewer negative effects. However, the pandemic can prove more challenging for small-to-medium-sized (SME) enterprises.
Smaller construction firms are the hardest hit in the industry. The volatility of the market during COVID-19 is not helping the situation. For this reason, many SMEs are in survival mode.
In the short term, what happens to subcontractors during the pandemic will matter greatly. The outcome of this group may indicate what will happen to the construction industry in the long run.
Accordingly, it’s important to keep construction workers safe. It’s equally as important to keep subcontractor balance sheets healthy. All of these measures are critical for the overall recovery of the construction industry.
Still, the dire conditions in the present market will compel many construction companies to take shortcuts. However, it’s important that these measures help you to reach your long-term goals.
Moving fast can help you to gain an advantage in an uncertain market. However, you’ll find that those moves are more advantageous if you know where you’re headed. A payment compliance and management system can help you to do just that.
Streamline Finance and Compliance With a Payment Management System
A payment management system is a detailed, digital construction invoice. You may also hear this kind of software called a contractor management system. It allows you to submit invoices with several supporting documents.
For instance, you may include information about the progress of a project with your invoice. You might also include requests for work that you’ve completed.
A payment management system allows you to provide a detailed accounting of the work that you’ve completed. It also allows you to provide in-depth reporting of the materials you’ve used for that portion of the project.
With a contractor management system, you’ll make use of standard payment application forms. For example, AIA documents such as D702 and ConsensusDocs 710 are standard in the construction industry. Contractor management services allow you to submit comparable information.
The first page of an AIA document typically includes an overview of project status. It also provides critical project information.
Typically, you’d refer to this information as the payment application form. Now more than ever, you need an effective way to submit this information. By automating your pay information forms, you can weather the COVID-19 storm.
The Trouble With Traditional Payment Management
Invoicing and payments are a critical part of any construction project. However, the traditional method of invoicing and payments can prove cumbersome. More worrisome is that they can serve as a distraction.
Often, invoicing and payments can prove problematic for project managers and subcontractors. For this reason, it’s important to choose a payment compliance solution that can help you to decrease your workload.
A payment management system such as Theo Build allows you to automate your core invoicing and compliance processes. As a result, it can significantly reduce the time, money, and resources that you spend on project payments to subcontractors.
With Theo Build, you’ll have access to user-friendly contractor project management software. Our software will help you to automate the entire subcontractor-to-contractor invoicing cycle. More importantly, it will help you to merge payment and compliance into one seamless monthly process.
You might think that setting up such an empowering system might take more time than you have. However, you can onboard with Theo Build and as little as 10 to 15 minutes. If needed, you can take advantage of our white glove onboarding for general contractors and subcontractors.
Transparency via Technology
Currently, builders spend more than half of their time on administrative duties. Administrative tasks can distract builders from actually working on construction projects.
A solution such as Theo Build can help you to save time and money. For example, you can use our technology to automate the draw process.
By doing so, you can drastically reduce the burden of collecting dozens of spreadsheets and lien waivers each month. Furthermore, Theo Build can help you to build bigger and better.
With Theo Build, you’ll never have to worry about a subscription. You’ll pay only for what you use—and that’s it.
By taking advantage of Theo Build, you can spend more time focusing on construction projects. Our technology allows you to automate some of the most burdensome and distracting tasks in admin work.
Theo Build allows you to eliminate the use of error-prone spreadsheets. At the same time, our software will enhance the timeliness and quality of your reporting.
More importantly, our technology enables you to operate across the cloud. You can use our construction management software to get everyone working on the same page.
With Theo Build, everyone can work from a single source of the truth. Above all, you can use Theo Build to provide the transparency that clients demand in today’s uncertain market.
Get Paid Faster and Start Saving Time and Money Today
Now you know more about construction payment and compliance management in the wake of COVID-19.
With Theo Build, you can get rid of spreadsheets forever. Our powerful cloud-based platform gives you access to digitized AIA invoicing.
Furthermore, you can use our software to include lien waivers as an integrated step in your invoicing process. By doing so, you can get paid faster and increase your cash flow greatly.
Theo Build will help you to reduce errors and misalignments. Most importantly, we’ll help you to keep your invoicing on track.
Sign up for your free Theo Build account today to start getting your invoices right the first time—and every time.