4 Ways To Improve Accounts Receivable Process In Residential Construction

If you’re a Supplier in the residential construction industry, you’ve probably experienced headaches getting paid, in addition to more recent supply chain shortages that have negatively impacted your business. Slow, late or partial payments can cause serious cash flow issues. While any business can experience this issue, residential construction is especially vulnerable due to long periods between billing and collection. Inefficient accounts receivable procedures can seriously impact a company’s cash flow. Being aware of potential issues and developing strategies, such as using a payment management system, can make the difference between thriving and being barely able to stay afloat. Here are four issues Suppliers frequently experience and ways to resolve them with the right accounts receivable software.

Become Familiar with Builders’ Accounts Payable Processes

To better manage accounts receivables, you need a good grasp of your Builders’ accounts payable processes. In general terms, a Builder’s accounting department will only pay valid and accurate invoices. In fact, most have internal controls to prevent paying inaccurate or fraudulent invoices or paying Trades twice. Sending accurate and timely invoices with detailed descriptions provides proof you delivered the right supplies at the quoted price, thereby enabling you to get paid quicker, while also building trust with your Builders. And if you have past-due invoices, it’s important to maintain open communication with your Builders to determine what issues they’re experiencing on their end. Studies show the longer receivables go uncollected, the less likely they are to be partially or fully collected1.

Improve Your Invoicing Process

Generating invoices and tracking how much a Builder owes you can be an arduous process, especially when you add escalating material costs, inaccurate estimates and change orders into the mix. Without efficient and accurate invoicing, Suppliers can lose track of what they’re owed and lose money. With such tight margins, coupled with inflationary cost volatility, you can’t afford to fall back on archaic invoicing methods. Using payment management software that interfaces with an invoicing component is vital to maintaining adequate cash flow. A healthy cash flow ensures being able to deliver materials to your Builders and maintain ongoing relationships.

Gain Visibility into Invoices and Payments

Look for a solution that enables the ability to view transactions, make changes to payment methods and update banking information. With a simple click, you should be able to select how and when you want to receive payments — instantly, in a few days or somewhere in between. As a Supplier, you’ll benefit from being able to see when you get paid, regardless if you’re at a job site, in transit or in the back-office. A solution that integrates with your existing Supplier software would be an added perk.

Create Accounts Receivable Reports

A payment solution should also offer the ability to download data into a spreadsheet such as Excel for further analysis. This can help you track trends (e.g., late payments), improve internal processes and even safeguard long-term relationships between you and your Builders.

Incorporate A Software 

Incorporating the right payment software provides Suppliers with complete control on how they receive payments and the ability to change payment options. With 100% paperless transactions and 24/7 access to real-time messaging and payment and fund status, the risk of fraudulent activity will significantly decrease and you’ll experience far greater security.

Improve Your Accounts Receivable Process With Hyphen Wallet For Suppliers 

Hyphen Wallet is a free service to Suppliers provided by Builders. There is no cost to accept payments via check or ACH and a minimal fee to receive expedited payments. Hyphen Wallet provides the choice of how and when you get paid, with real-time visibility. Hyphen Wallet offers a digital alternative that is fast, secure and cost effective. Investing in this payment management software will enable you to increase your cash flow visibility, while minimizing back-office support staff and manual reconciliation. Learn more about Hyphen Wallet for Suppliers by scheduling a demo today or signing up.

1 Source: https://newsroom.cnb.com/en/business/finances/accounts-receivable-collection.html