Accounts payable (AP) in construction goes far beyond basic invoice processing and data entry. It’s about accurately syncing job costs with projects for clear financial visibility while managing relationships with vendors, suppliers, and subcontractors. Effective AP processes are essential for maintaining a healthy cash flow — a persistent challenge for the construction industry.
If your firm still relies on manual AP methods, you’re likely facing more risks than rewards. Traditional, paper-based processes and manual data entry are prone to errors and delays, resulting in missed billing cycles, frustrated vendors, costly disputes, and budget overruns that disrupt cash flow.
Fortunately, there’s a better way. Construction accounts payable software is built to address the industry’s unique needs. By automating everything from invoice intake through approvals, AP software for construction eliminates bottlenecks, reduces errors, and streamlines workflows. The result? Improved cost control, stronger vendor relationships, and increased financial stability for long-term growth and profitability.
The construction industry’s project-based nature requires specialized AP processes to effectively manage project costs and vendor payments.
Construction costs like labor, materials, and equipment are tracked on a per-project basis. Job-level cost coding and approval of expenses are needed to ensure accurate accounting across multiple projects and prevent budget overruns.
Unlike other industries, construction AP uses multi-layered approval pathways, adding complexity to the process. In addition to AP teams, project managers, field supervisors, controllers, and finance teams play a critical role in validating costs, reducing risks, and ensuring accuracy.
Retainage, change orders, and lien waivers complicate construction billing and payments. These practices need to be addressed separately and can impact cash flow if not managed properly. Tracking payments and managing documents is also essential for maintaining compliance.
Construction AP processes are closely tied to job costing and payroll systems for accurate allocation of project-based expenses. Integration of these systems is also necessary to ensure compliance with labor regulations and provide audit trails.
Traditional accounts payable systems may have worked fine in the past, but they can’t support the growing complexity and fast-paced nature of modern construction firms. They fall short in four significant ways:
Accounts payable automation software gives controllers, accounting managers, and finance staff more insight into their financial operations. It enables teams to streamline processes, reduce errors, and make informed decisions to better control costs.
Here are some of the top reasons firms are switching to AP software for construction:
hh2’s construction accounts payable software, Document Flow, modernizes your AP systems by automating workflows and eliminating manual tasks — boosting accuracy, accelerating approvals, and providing real-time visibility throughout the process.
Advanced OCR technology automatically captures invoice data from emails and enters it into your system. Or, use our mobile app to scan paper invoices and receipts while in the field. Data is instantly uploaded and organized into the software, eliminating manual entry and human errors.
Speed up your approval process through our customizable invoice and expense routing. Choose from project-based routing, vendor-based routing, or tiered approvals based on a specific dollar threshold around your specific needs.
With Document Flow, you can add unlimited approvers to fit your AP workflow. Our mobile app enables project managers and site supervisors to review and approve expenses instantly — from the field, the back office, or on the go — keeping the process moving without delays.
Seamless integration with top ERPs like Sage 100, Viewpoint Vista, and Foundation ensures AP accuracy while streamlining workflows and giving you real-time visibility into your project finances.
Document Flow is purpose-built for construction finance teams, offering essential features such as:
Construction AP software delivers a wide range of benefits beyond automation. Here are just a few you may experience.
Document Flow’s automated invoice approval workflows eliminate manual data entry, instantly capturing and syncing invoice data with your ERP — cutting processing and reconciliation time by 50 percent.
Manual AP processes are prone to errors. Invoice automation for contractors reduces errors and catches duplicates or discrepancies before you make payments, ensuring greater accuracy.
Faster, more accurate invoice processing results in more on-time payments and fewer disputes with vendors. Real-time invoice tracking and full access to vendor documents build transparency and trust for stronger, long-term partnerships and continued growth.
Real-time visibility into invoice status, outstanding liabilities, and cash flow enables you to manage expenses more effectively and make informed financial decisions. Enhanced transparency provides tighter control over project costs so you can optimize payment timing and improve cash flow management.
In construction, AP isn’t just an administrative task; it’s a strategic function where you can optimize cash flow, improve vendor relationships, and ensure profitability — if you’re using the right tools. Construction accounts payable software like hh2 Document Flow empowers your AP, job costing, and finance teams through faster, more accurate, and fully integrated systems.
Ready to maximize AP efficiency, increase visibility, and enhance cost savings? Explore Document Flow or book a personalized demo today.