As a construction company, getting paid on time is crucial to the success of your business. Delays in payment can cause cash flow issues and put your business in a difficult financial position. Fortunately, accounts receivable automation software can help you manage your invoicing and payment processes, ensuring that you get paid on time, lowering your DSO, optimize your company's accounts receivable and improving your overall cash flow.
However, implementing accounts receivable automation software is not without its challenges. In order to successfully implement this type of software and enjoy the benefits it offers, it's important to avoid common mistakes. In this article, we'll discuss the top 5 accounts receivable mistakes to avoid when implementing automation in construction.
One of the biggest mistakes that companies make when implementing accounts receivable automation software is not doing their homework before choosing a software that will work for their companies needs. Not all AR automation is created equal and you'll avoid a lot of headaches if you do this up front. Make sure you truly understand how you want the automations to work for you, often times software comes with bloated features and needs you will never use that will complicate the process and adoption from your team is going to be tough. This is a crucial step, as choosing the wrong software can lead to a host of problems down the road. Avoid this mistake, be sure to research and compare different software to find one that offers the features and support you need. Look for one with a proven track record in the construction industry, as well as a user-friendly interface and readily available training and support services.
Not fully understanding how you use the software can be a deal breaker. Doing your research and having a strong working knowledge of the AR process, and the nuances of it when it comes to construction is important to implementing a good automation process. Jumping in both feet and hoping that the new software fixes the problem is a recipe for disaster. It has to be managed by your accounts receivable department. Understand the capabilities and limitations of the software. One of the biggest mistakes you can make when implementing accounts receivable automation software is not fully understanding the capabilities and limitations of the tool you choose. It's important to thoroughly research and evaluate the different options available, and make sure that the software you select has all the features you need and is a good fit for your business.
Some AR automation tool may only offer basic invoicing and payment tracking capabilities, while others may have more advanced features such as automatic payment reminders, integration with other financial tools, and customizable reports. You'll need to determine which features are most important to your business, and choose a software that offers those features. It's also important to consider the limitations of the software you choose. Some accounts receivable automation tools may only be compatible with certain types of payment methods or certain ERPs, or may not be able to integrate with other financial software you use. In fact, there are very few tools that integrate with most construction ERPS.
Once you've selected the right accounts receivable automation software, it's crucial to properly train your team on how to use it and give them adequate expectations to match what you are wanting the new process to look like. This will ensure that everyone is on the same page, and that the new software marriage between your accounting software and your new automation tool is being used to its full potential. Proper training should include an overview of the software's features and capabilities, as well as step-by-step instructions on how to use the different functions, and touch points for reporting. How often you want to know that there is an issue with an invoice, how quickly you want updates on payments or invoices that are going on deaf ears. It's also a good idea to have a designated point person who can answer any questions or troubleshoot any issues that may arise. This will ensure that your team has the support they need to effectively use the software, and minimize any disruption to your business.
Construction collections automation software can help streamline your companies invoicing and payment processes, but it's not a magic fix. You'll still need to regularly review and update your processes to ensure they are efficient and effective, as well as revised properly after you implement your new tool. It is just that, another tool in the belt and it should be treated that way.
You may need to make changes to the way you generate invoices, such as including more detailed information or using a standardized format. You may also want to set up automatic payment reminders for clients, or implement a system for following up on unpaid invoices. The time you free up with your team may now be better suited to help include more detail with each invoice, like photos of the work done or a copy of each field work ticket or trucking log. By regularly reviewing and updating your processes, you can maximize the benefits of your accounts receivable automation software and also free up your team to get stuff done that actually matters and not spend their entire day sending follow up emails. Gone are the days of the manual accounts receivable processes that we've been used to. It's a brave new world out there and us here in construction need to catch up.
Finally, the last mistake you want to avoid is not staying up-to-date with software updates and enhancements. Watch your emails, talk to your software provider, make sure you are in the know with what they're working on for features and how those features can help guide and shape your internal process moving forward. This is a problem because software providers often release updates and enhancements that can improve the functionality and performance of the software. If you don't stay up-to-date with these updates, you could be missing out on important improvements and new features. To avoid this mistake, be sure to regularly check for updates and enhancements, and install them as soon as they are available. This will help to ensure that you are always using the latest and most advanced version of the software.
Implementing AR automation software can be a valuable tool for construction companies looking to improve their cash flow and streamline their payment processes, and is going to become so much more important in the coming years. We have to be better about giving our accounting teams the tools they need to get their jobs done efficiently, and can make an impact and go home feeling like they've contributed as opposed to just chasing invoices. It's important to avoid common mistakes such as not fully understanding the capabilities and limitations of the software, not properly training your team on how to use it, and not regularly reviewing and updating your processes. Let's embrace the automation, increase our cash-flow, decrease our DSO, and have happier teams.
