AP is Broken in Construction Here is How to Fix It Without Hiring More Staff

It’s Tuesday, you’ve just stopped by the office to drop off some receipts, and you discover your overwhelmed accounts payable (AP) specialists struggling with stacks of in-progress, unpaid, and late invoices. Their hands are tied between trying to enter line data, answering email chains, and chasing late approvals. 

All this mess leads to late payments, duplicate entries, lost discounts, annoyed vendors, and a burnt-out accounts payable construction professional. Your first instinct may be to hire more staff to alleviate the burden and improve back-office functionality.

But before you start posting on job sites, the solution to this problem may be as simple as shifting to a smarter workflow with construction AP software. This article will help you decide if this is right for you.

The Gauntlet That Is Construction Accounts Payable

Managing accounting in any business is a struggle, but grappling with the complex and time-sensitive bookkeeping of a busy construction company is like wrestling a twelve-headed hydra. From tracking down and correcting paper timesheets to the intensive workload around processing certified payroll, there’s no beast quite like construction accounting. And when you stick with manual processes, the consequences show up as dents in your profit margins. But it’s not about laziness or lack of effort — your AP managers are trying to operate with a broken system that’s costing you money, morale, and vendor trust.

But that’s not all:

• Struggling to stay organized: Many construction companies still use paper timesheets and spreadsheets. When you have dozens of subcontractors, employees, and vendors across multiple job sites, it can be a gruelling task to ensure accurate categorization and job coding.

• Fighting with inefficient communication and collaboration: Your field teams generate the spending, but your office team handles payments. Poor communication and processes can cause friction between your field and office teams.

• Chasing down approval: The next rung of the ladder your accounting specialist has to climb is what we like to call “approval tag”. When approval chains span project managers, supervisors, and executives across multiple sites and offices, processing payroll, accounts payable (AP), and accounts receivable (AR) is a nightmare without a dedicated workflow. 

• Dealing with the costly consequences of delays: Even when your accounting specialist does everything right, issues such as hunting down timesheets, correcting errors, manually entering data, and running the approval gauntlet still lead to delays. And, as any contractor knows, every delay can hold up job progress, damage vendor trust, frustrate your clients, and leave your team feeling exhausted, overburdened, and demoralized.

The Hidden Cost of Manual AP Workflows 

With the rapid influx of new technology, artificial intelligence, an app for everything, and even the seemingly endless reports of data breaches, it’s understandable why construction companies can be reluctant to overcomplicate processes with construction accounts payable software and applications. However, while your construction company doesn’t need to digitize everything, avoiding it altogether can be an inconvenience — one that drastically slows down processes.

Late fees or missed early-pay discounts

As we mentioned above, the gauntlet of traditional accounts payable construction processes inevitably leads to delays. Even if it’s just sometimes, paying late fees (or missing out on pay-early discounts) adds up. 

The more inefficient and analogous your process, the harder it is to meet deadlines. And this is especially problematic if you’re taking on government contracts, which require WH-347 forms to 

Double entry into ERP systems 

One of the fastest ways to screw up your books, add anxiety to an audit, and cause problems in your profits is with duplicate entries. When an AP specialist is swamped with papers, spreadsheets, and tasks, it’s easy for double entries to happen.

Duplicate payments or invoice errors 

When information isn’t centralized, it’s very easy for duplicates and data entry errors to occur. Aside from the frustration, these mistakes add up to issues with employee morale (if their paychecks aren’t accurate), audit issues, and (of course) profitability.

Disconnected systems that create data silos 

Efficiency is destroyed by data silos. When your systems aren’t communicating, and your accounting specialists need to take a dozen extra steps through individual software just to process daily tasks, productivity grinds to a halt.

What to Look For In AP Automation For Construction

The shift to digital is gaining momentum across the board. Sixty-six percent of all businesses believe AP is essential (according to a survey by Ardent & Partners’), and a Gartner study predicts that investments into accounts payable automation and supplier electronic invoicing software markets is expected to reach nearly $1.75 billion by 2026.

But even if you’re ready to digitize your accounting process with AP automation for construction, not just any software will do. With factors like rigid compliance, substantiated billing, union laws, and job coding, you need software that understands these unique nuances.

Mobile-friendly invoice capture

Creating a more efficient accounting workflow begins with ensuring everyone has a solid, reliable system to fall back on. Provide your field and office team with tools that make managing key documentation easy and fast. When choosing accounts payable construction software, look for a mobile-friendly solution that allows employees to record their timesheets, receipts, and invoices from their smartphones. 

Role-based approval routing 

Instead of leaving stakeholders to struggle when it comes to approval, you can use an accounts payable construction solution that automatically routes approvals directly to the right person at the right time (based on the project, vendor, or invoice amount).

Digital audit trail and version control 

Trying to keep stacks of paper and file after file of spreadsheets organized, use construction AP software that centralizes all of your data, automatically organizes and categorizes documentation, and lets you customize version control.

ERP integration (e.g., Sage 300, Vista, Foundation) 

Even if you already have an ERP system you’re happy with, adding a construction accounts payable solution can be a great way to connect disparate systems and improve collaboration. Choose an AP software that integrates seamlessly into your current stack to avoid unnecessary downtime or costs of upgrading other software.

Real-time visibility into outstanding invoices and commitments 

You can’t foster financial health without a clear view of your financial picture. To ensure profitable forecasting and accurate bidding, choose AP automation for construction that provides detailed insights into your financial data.

hh2 Accounts Payable Construction Software Is Designed To Fit Your

If you want to give your team the best tools at the most cost (and time) effective price… hh2 is the solution designed by veteran contractors for contractors.

• Makes it easy on your team: With our email-to-invoice capture and scan import options, your team can document and submit invoices on-the-go using their smartphones. This means invoices are less likely to get overlooked or payments delayed because your accounting team has everything they need right in the hh2 cloud platform.

• Gives you ultimate control over your construction accounts payable: Your software needs to serve you, and support the unique needs of your team; which is why we developed hh2 with highly customizable approval workflows that you can tailor to your organization. 

• Keeps you ahead of the game: Never stress about missed deadlines or payments again thanks to our real-time status visibility and reporting dashboards. 

• Eliminates duplicate data: Because hh2 directly and seamlessly integrates with all major ERP solutions, you never have to worry about accidental double entries again. 

• Adapts to your trajectory: No matter what size you are now, or where you want to be in the next five, ten, or twenty years, hh2 is built to scale with you, and help you handle multiple companies, cost codes, jobs, equipment, and vendors. 

Maybe It’s Not A Staffing Problem — But A System Problem.

You have a great team, incredible business goals, and exceptional potential. That’s why you deserve to have systems that encourage and empower your growth, not impede it. If your construction accounts payable department is starting to feel overwhelming or understaffed, maybe it isn’t because you need more hands. 

Maybe you just need smarter workflows that support your unique goals and team dynamics. 

If you’re ready to streamline your accounts payable construction process, schedule a demo to learn how hh2 Document Flow means a more accurate, organized, and on-time construction AP.