When To Implement A Payment Management System In Residential Construction
Getting paid in full and on time is a frequent challenge for Home Builders, Suppliers and Subcontractors in the residential home construction industry. Construction delays, supply chain problems, cash flow shortages, payment fraud and other issues can hinder the timeliness of payments. Paying by check can create many headaches — from stolen checks and identity theft — to time-intensive, error-prone manual reconciliation for accounting staff. The following pain points can be prevented by managing payments with a state-of-the-art payment management system created specifically for residential Home Builders and Suppliers.
Waiting Too Long To Receive Payments
An inadequate or nonexistent paper trail can lead to long payment delays for Builders and Suppliers. If proper records of invoices, rendered services, or delivered supplies aren’t sent to the right parties, this can spell the difference between receiving payments in a timely manner or even waiting far too long to get paid or not getting paid at all. Minimizing back-office support staff and manual reconciliation by having an electronic payment system in place allows Suppliers the choice of how and when they get paid and allows for cash flow visibility.
Fraud involving mailed checks is a growing problem across the U.S., for consumers and businesses alike. The Atlanta, GA Evidence-Based Cybersecurity Research Group found an average of 1,325 checks were up for sale every week during October 2021, totaling $11.6 million in face value. But this figure only represented a small portion of the total number of checks that were stolen. Criminals may use the company name and address on your checks to commit identity theft and open bank accounts and/or apply for loans on your behalf. Although banks are usually good about replacing stolen money, identity theft is often harder to resolve and can severely damage your reputation and bottom line.
Delayed or Lost Payments
Issues with mailed payments aren’t only about nefarious activity committed by criminals. While the U.S. Postal Service states that only about 3% of mail is actually lost, countless news reports since November 2020 have highlighted the spike in significantly delayed mail. The pandemic, postal employee shortages and serious underfunding led to a record-low 62% of first-class mail delivered on time in December 2020, although the rate rebounded to 84% by the week of March 6, 2021. Why take the chance of mailing checks when payment management software can solve this problem?
Inability to See Payment Status
When payments are made via check, Suppliers don’t know when they’ll receive payments and Builders aren’t certain when their checks will be deposited and clear. This lack of transparency can lead to delays in flagging and settling discrepancies, disputes or fraudulent activity, as well as cash flow shortfalls and dissatisfied Suppliers who may not want to work with you again.
Time-Intensive, Manual Reconciliation
Some Builders and Suppliers still manually reconcile bills by comparing bill amounts on paper or electronic receipts to the amounts entered into their current accounting systems. Keeping track of all the receipts received on and off your job sites and then checking them off one-by-one against your ledger is a time-consuming process that is subject to human errors.
Explore Payment Management Systems for Builders & Suppliers with Hyphen Solutions
As a Builder, you can reduce the time and cost of processing payments to Suppliers, increase transaction security, be provided real-time visibility into payment statuses, and have satisfied Suppliers with faster payments in Hyphen Wallet. This innovative online payment management system offers one central location and complete payment integration. Auto-reconciliation ensures a fast, accurate financial close cycle and improves cash flow visibility and working capital management. Automation makes it easy to check records, track past and present expenses and identify fraudulent charges. With accounts payable automation, invoice processing time is reduced by 80% and invoice errors by 23%.
Hyphen Wallet puts Suppliers in the driver’s seat by providing a choice of how and when to get paid as well as 24/7 access to the status of payments and funds. This solution offers many benefits, including increased cash flow visibility, reduced back-office support and elimination of error-prone manual reconciliation.
Stay Tuned To Read More About Residential Construction Payment Software Benefits
An advanced invoice and payment management solution designed specifically for residential construction companies can reduce costly and time-consuming processes, increase security and minimize mistakes. The Benefits of An Integrated Payment Management System in Residential Construction delves further into how Builders and Suppliers can benefit from payment management systems created specifically for their industry.