Streamlining Construction Accounting: The Power of Technology
Authored by Ben Lochbihler : Professionals : CLA (CliftonLarsonAllen) (claconnect.com)
In the fast-paced world of the construction industry, managing finances and accounting processes can be a complex and time-consuming task. However, utilizing automation technology, construction companies now have the opportunity to streamline their accounting processes, improve accuracy, and enhance overall efficiency. The use of technology and AI to perform tasks or processes will be a crucial tool for business to leverage, enabling scalability of your business in an ever-changing market. More and more companies are making use of software, machines, or other technologies to automate repetitive or manual tasks, provide real-time insights, and enhance accuracy. thereby increasing efficiency, accuracy, and productivity. Examples of these tools include:
- Robotic Process Automation (RPA): Software robots that mimic human actions to perform repetitive tasks, such as data entry, such as payables and receivables, or report generation.
- Workflow automation: Streamlining the flow of tasks and information within a process or across multiple systems.
- Chatbots and virtual assistants: AI-powered tools that can interact with users and provide instant responses or perform specific tasks.
- Machine learning and artificial intelligence: Algorithms and models that can learn from data and make predictions or decisions without explicit programming.
What are the benefits of these tools?
Time and Cost Savings:
Construction finance departments, like so many other industries, often run lean creating a continual need for efficiencies. Automation tools, such as RPA, eliminate manual data entry and repetitive tasks, saving valuable time for accounting professionals, reducing the need for manual intervention. Streamlined processes enable construction companies to allocate resources more effectively, resulting in cost savings. Systems can also generate audit trails and maintain comprehensive records, simplifying compliance audits.
Real-Time Financial Insights:
Tools such as personalized dashboards and mobile field applications provide real-time access to financial data, allowing managers to make informed decisions promptly, even when remote from the project site. Reporting and analytics tools, such as Microsoft Power BI, can be used to connect digital source data from multiple platforms and create Key Performance Indicators (KPIs). A business can now gain a comprehensive overview of their budget-to-actual, project profitability, cash flow, and hours worked helping contractors identify potential issues and take corrective actions promptly. These tools integrate accounting systems with project management software, enabling seamless collaboration between finance and project teams. Contractors can track project costs, monitor budget variances, and generate accurate invoices based on project milestones. Automated workflows streamline the approval process, reducing delays and improving project efficiency.
Shrinking Workforce:
The shrinking workforce is another reason to consider automation in accounting. As the baby boomer generation retires, there is a significant loss of experienced accounting professionals. This loss of knowledge and expertise can be mitigated by implementing automation in accounting processes. Automation can help reduce the workload of existing staff and allow them to focus on more complex tasks. Additionally, automation can help attract and retain younger talent who are more comfortable with technology and may be less interested in performing repetitive manual tasks. By automating accounting processes, companies can ensure that they have the necessary resources to maintain their financial operations and remain competitive in the marketplace.
Efficient Payroll and Vendor Management:
RPA simplifies payroll processing, ensuring accurate and timely payments to employees. Construction companies can automate vendor management, including invoice processing, payment approvals, and vendor communication. By streamlining these processes, businesses can improve relationships with vendors and reduce payment delays.
Some benefits of accounts payable automation include:
- Improved accuracy: Automation reduces the risk of human error and ensures accurate data entry.
- Enhanced visibility and control: Automation provides real-time visibility into the accounts payable process, allowing for better tracking and control of invoices and payments.
- Cost savings: Automation reduces the need for manual labor and paper-based processes, resulting in cost savings for the organization.
- Increased compliance: Automation tools help ensure compliance with internal controls and regulatory requirements.
There are various software solutions available for accounts payable automation, such as cloud-based platforms or integrated systems that can be customized to meet the specific needs of an organization.
Accounting automation has the potential to revolutionize financial management in the construction industry. By leveraging the latest tools, construction companies can save time and costs, gain real-time financial insights, enhance accuracy and compliance, streamline project management, and improve payroll and vendor management. Embracing automation technology can empower construction businesses to focus on their core operations, drive growth, and stay ahead in a competitive market.
Mary Jo is a principal with over 15 years of experience serving the construction industry. A member of CLA's construction tax leadership, she is an advisor providing tax and consulting services to the construction industry. She helps construction companies and their owners navigate industry challenges, succession planning, and complex tax legislation.
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