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One of the last industries to hop on technology’s change curve is construction. In the finance sector in particular, standard practices are often decades behind. The industry is only recently working to embrace some much-needed updates. The most notable solutions being adopted include using cloud-based finance platforms, leveraging accounting automations, and embracing artificial intelligence for forecasting.
In this guide, we cover why more businesses in the AEC space must use technology to improve their financing and budgeting systems, the benefits of integrating AI into financial oversight, and the best ways to integrate technology to improve financial oversight.
Why construction finance needs a tech upgrade
According to a recent report from KPMG, 9 out of 10 Canadian construction leaders agree that the industry is technologically behind and must embrace new tech to get productivity where it needs to be to meet demand. Construction, a multi-billion-dollar industry, contributes heavily to the GDP. You could then infer that if the construction industry fails to catch up, it could mean drastic economic friction in the future.
The current standard tech tools in finance include spreadsheets and, occasionally, physical paperwork, such as notepads and invoices. These methods are time-intensive, delay project approvals, and are prone to human errors. Not to mention, the financial data is often siloed, and reporting is nearly impossible.
As projects boom in quantity and scope, managing the finances is becoming increasingly challenging. These issues multiply across worksites, companies, and ultimately, city initiatives. As long as the construction industry remains complacent in its current processes, the more dire the industry’s overall velocity becomes.
Benefits of integrating technology into construction finance
Yes, modernizing financial processes will make teams and projects more efficient. But the benefits go beyond productivity. Integrating new technology means:
- Accounting errors generally made by humans are greatly reduced
- Invoice processing is streamlined
- Visibility into integral data insights increases
- Financial forecasting becomes more accurate
- Companies cut labor costs and unify their tooling
Additionally, onboarding an updated financial software tool is seamless in most cases. Most digital tools are simple, intuitive, and come with onboarding and training sessions.
The top tech solutions to transform construction finance
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1. Build a cloud-based, unified finance platform
A simple, unified finance platform accessible on the cloud offers many advantages to construction teams. Accounting processes are more efficient, real-time finance insights are accessible, and collaboration between colleagues and teams is easy.
Where they were once separate digital tools, there are now many catch-all finance tools that offer expense tracking, payroll, task automation, budgeting, forecasting, and intuitive financial reporting. By centralizing these tasks and processes on a cloud-based platform, decision-making is sped up. Project timelines are also no longer a problem.
2. Automate accounting processes with software
Imagine going from a pen-and-paper accounting method to a digital tool that takes over the tedious to-dos for you. It’s all made possible with automations. Here are a few of the ways automations improve accounting:
- Invoice processing: Capture, process, and pay workers automatically with finance software. It can automatically match invoices to corresponding purchase orders, send them for approval, and effectively minimize manual intervention.
- Financial reporting: Handy automation features mean real-time financial reports whenever you need them. Balance sheets, profit and loss statements, cash flow analyses, and more are auto-populated to speed up decision-making.
- Tax compliance: Automation software ensures all of your company’s tax requirements are met. Filing tax returns, managing deductions, and meeting the standard of your jurisdiction’s tax laws are a breeze.
- Budget management: Automation also means you can track any project’s budget in real-time and compare current spend against target budget amounts.
- Automatic document management: The old filing cabinet is a thing of the past. With new financial software, you can automate your document management. Change orders, contracts, invoice history, and more are all automatically filed digitally. No worrying about organization or losing a document you might need down the road.
3. Use AI for estimating and forecasting
Artificial Intelligence (AI) is transforming most industries, and construction is no exception. In the finance department, it could save time, money, and headaches. Many businesses are using AI-powered accounts payable and receivable to process high volumes of invoices and complicated approval systems.
AI can also use your historical data to improve the estimating and forecasting processes. It learns your project scope inside and out, and determines how to best budget, predict timelines, and project ROI.
4. Integrate BIM with cost control
Building Information Modeling (BIM) is re-shaping project planning in construction, and it can do the same for the finance department, thanks to the power of integrations. BIM systems provide digital models of work sites so teams can collaborate better, improve decision-making, and reduce delays and rework. It streamlines material estimation, scheduling, equipment deployment, and more.
When integrated with the finance software, accounting teams can ensure the project stays on budget by planning and forecasting more accurately. Finance and project management should integrate for the most efficient project outcome possible.
5. Implement ERP systems for connected finance
Implementing Enterprise Resource Planning (ERP) systems with finance features streamlines all finance and accounting workflows. Capabilities like project cost control, finance dashboards, budget management, invoicing, and more are unified in one easy-to-use platform.
This results in more efficiency, lower labor costs, and accurate forecasting. Understanding profit margins and financial trends is simplified when all these must-have capabilities sync together. Real-time data means real-time success.
6. Leverage mobile apps for field finance
Especially in construction, it’s important that your new financial tooling is available on the go. Construction leaders and managers often need to be looped in about finance going on, and carrying hard copy updates slows production and causes project delays.
By choosing new field management finance software formatted for mobile devices, everyone on the team can gain the same visibility on financial reports and projections. Also, if anything were to happen on-site that causes a financial issue or delay, those updates can be relayed to accounting almost instantly through the project management app.
7. Track ROI and scale successful tech
How do you track and scale your business with a spreadsheet? Not easily. With comprehensive financial software, construction companies can automatically track ROI and make informed business decisions for the future.
Project feasibility, risk management, and resource allocation are recorded and available instantly for finance teams. This means that assessing profitability and building strategies to grow the business is made easy.
Final takeaways
Residential, commercial, and infrastructure construction demand is showing no signs of slowing. However, if companies remain unmoved in their financial operations, the industry will be plagued with delays and initiative blockers.
But adopting new technology doesn’t have to be a daunting task. By migrating to software that integrates with BIM models, uses AI and automations, and tracks ROI on the go, companies will be up to speed and on time with future projects.
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