Industry Insights

Why You Should Automate Receivables in Your Contracting Business

Kristen Frisa
August 31, 2023
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Accounts receivables are the lifeblood of a company. Automating the process to make it speedier and more precise can open your business to more consistent payments and save your receivables staff time and frustration.

There’s little so crucial to the health of a business than incoming money. When receivables are slow, working capital dries up and may force work to halt, leaving a contracting business in dire straits.

But managing receivables can be a lot of work. Accounts receivable (AR) teams liaise with field teams to establish project progress, create invoices, then chase down clients for payment – the process is tedious, error-prone, and time-consuming.

Getting paid shouldn’t be this hard. This article will outline best practices for the accounts receivable process and then show how automation can help make the process faster and easier.

Invoicing best practices to keep your receivables in order

The first step to getting accounts receivable processes on track is to get the money coming in the door. Get your invoicing in order by keeping good billing habits.

Create timely, detailed invoices so clients know what they’re paying for

Clients aren’t likely to send money if you don’t send an invoice. Further, the invoice has to make paying as quick and painless as possible. A good invoice is detailed and direct and lets clients know what methods they can use to pay the bill. It should include:

  • Your business name, address, and contact info, and the same information for your clients
  • A description of services you’ve provided
  • The date of the invoice and the date you completed the work
  • An invoice number for better tracking
  • Payment information, like a Truss payment link or who to make the check out to

Don’t neglect your invoices! How and when you create your invoices can impact your payment rates and timelines.

Don’t leave money on the table – remember to bill for change orders!

Things can get sticky when you have to charge clients more than the original bid amount because of alterations to the construction plan. However, most contracts don’t provide enough overhead to cover the costs of additional, initially unforeseen work. Use formal change order contracts to agree to the added work and its costs, and then bill for it during the next scheduled billing cycle. Again, use detailed invoicing so your client knows where the charges apply.

Follow up

Unfortunately, sending a single invoice isn’t always enough to get you paid. Your invoice may get lost in your clients’ inboxes. Following up with polite reminders is an effective strategy to avoid late payments. Truss makes it easy to notify clients about unpaid invoices with a single click.

Smooth the way

Make it easy for busy people to pay your invoices. Create simple, detailed digital invoices that make it clear what you’re billing for. With Truss, you can even create a payment link for your clients. They can sign in to view paid and outstanding invoices and pay you in minutes. By sidestepping the hassle of traditional payment methods, you can encourage clients to pay up faster and avoid late payments.

Why you should automate your receivables

Manual processes take too much time. Mailing invoices, reconciling accounts, and correcting errors suck up so much time that office staff runs out of time. Experts have estimated financial teams spend 90% of their time on the financial close of a project, and only 10% in analyzing its numbers. In other words, repetitive manual work takes precious time that employees could use to move the company forward. Free up your team for more strategic tasks like analyzing project data to determine more effective workflows by automating those onerous manual tasks involved in accounts receivable management.

Client retention

Streamlining accounts and your receivable processes improves customer satisfaction and retention because it saves time and hassle for clients, too. Customer retention is worth the effort – it can cost up to seven times less than acquiring new customers, and selling to existing customers is more often successful than to new leads.

Improved cash flow

Cash flow refers to the money moving into and out of your business over time. A healthy cash flow leaves enough in the accounts to keep your business running and cover immediate expenses that may emerge. Your AR process ultimately affects your accounts payable process.

Managing cash flow becomes a lot simpler when payments are consistent and predictable – in other words, when your clients pay their bills in a timely manner! Automating receivables makes it simpler for clients to pay their bills, and online payment systems mean the money reaches your accounts faster.

Better transparency

No more blind faith that the check is in the mail. Truss allows you to track payments from the time your clients hit send right up until the funds hit your account. With this information, your finance teams can make better financial decisions about spending money in your construction business and better manage that all-important cash flow.

Allows employee focus to shift

Forget chasing individual invoices, cross-checking payment receipts with bookkeeping records, and manual follow-ups on unfilled invoices. Research shows AR teams who automate these processes experience 67% better productivity. Further, using Truss for your receivables means no more driving to your clients to pick up checks or to the bank to cash them.

With Truss, you can now connect your Quickbooks Online account, import all unpaid invoices, and even choose to automatically send payment requests through Truss to users with outstanding invoices. When payment comes in, the system automatically marks the invoice as paid in your accounting software.

That two-thirds improvement in productivity creates time for your office staff to further the financial benefits by analyzing data to help your company become more effective overall.

Advantages of accounts receivable automation

Automating accounts receivables gives your company back some of its most important resource: time. Connecting your construction accounting system to Truss’ online payment system will also help you avoid late payments, data entry errors, improve security, and get your cash faster.

Protect your cash flow and rise above the repetitive daily workflows by automating your receivables with Truss. Get started free today.

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