Technology to the Rescue
Construction businesses are turning to business intelligence (BI) solutions to help address this type of challenge. In AvidXchange’s survey of middle market finance teams, 50% said they are using automation technology to analyze data and make more informed decisions.
By leveraging advanced analytics tools, back-office staff can gain valuable insights into the invoice management process. Additionally, understanding invoice processing time offers other benefits, including:
Increased Efficiency
Measuring invoice processing time is vital for understanding the efficiency of back-office operations and identifying areas for improvement. By analyzing this data, construction AP teams can pinpoint bottlenecks in the invoice approval process and take proactive steps to mitigate delays. Identifying opportunities for automation or optimization can increase operational efficiency and drive cost savings.
Improved Relationships
Knowing how long it takes an invoice to go through each stage of processing allows construction firms to set realistic expectations with clients, subcontractors and materials suppliers. It enables them to establish more accurate payment timelines and avoid potential disputes or late payments.
By embracing business analytics in their back-office accounting practices, construction firms can unlock actionable insights that drive better decision-making. With a clear understanding of their invoice management timeline, construction businesses can improve overall financial performance while fostering stronger relationships with stakeholders and partners.
Invoice Processing Time: Why Does It Matter for Construction Firms?
In today’s uncertain economic environment, construction firms are putting an extra emphasis on spend management – monitoring and maximizing company spend. The back-office accounts payable (AP) team plays a critical role in this expenditure cycle, with success tightly linked to the efficiency and accuracy of their processes.
The payables process generally involves several steps:
- Receiving and validating invoices
- Capturing and coding the data on the invoice (indexing)
- Matching the invoice to purchase orders and receipts
- Routing the invoice through approval workflows
- Paying materials suppliers and subcontractors
It’s important for construction firms to know how long it takes an invoice to go from indexing to approval, as it helps identify bottlenecks in their AP process. However, determining this information without using technology can be challenging – and with an estimated 50% of invoices received still being paper-based, this challenge is exacerbated.
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