Late payment in the construction industry has always been a problem but it appears that the situation has become worse following the coronavirus pandemic. In a survey carried out by Lloyds Bank Commercial Banking at the end of 2021, two-thirds of contractors said they have experienced slower payment since the start of the pandemic.
This of course has a knock-on effect throughout the supply chain. From the contractor to the sub-contractor, the trade professionals and merchants, through to their suppliers and so on, putting further financial strain on companies and testing the efficiency of the accounts payable departments.
Reasons for delayed payment can be due to several factors; an invoice could be missed or accidently deleted, sent to the wrong person, missing a purchase order number or information may have been keyed in incorrectly, all resulting in a supplier needing to resubmit the invoice.
E-invoicing is a simple and effective way to overcome these issues, maintain a healthy supply chain and add value to your accounts payable.
We already use e-invoicing
There is a common misconception that because a construction company receives invoices or sends them as a PDF attachment, it has already moved from manual processing to e-invoicing.
This is not the case, the information on an invoice still needs to be read and entered into the system manually, which increases the risks of incorrect data entry. If OCR software is used instead of manual entry, someone will still need to verify and possibly correct the data along with validating against a PO and ensuring all fields are complete.
So what is true e-invoicing?
E-invoicing such as Tradex is EDI (Electronic Data Interchange). This is a straight-through processing method where the invoice is issued, received and processed electronically between companies.
The benefits of this seamless, end-to-end process to your business and the entire supply chain are significant.
It can:
• Improve accuracy by removing the potential for human error
• Reduce costs with straight through processing, automating the 'review and validation' processes to reduce time and cost
• Speed up invoice processing
• Increase productivity
• Provide better data insights
• Enable accurate cash flow forecasts
• Achieve more 'on-time' payments
For your suppliers, the gains are significant. By reducing errors you can achieve more ‘on-time’ payments, saving suppliers time as they no longer have to re-issue or chase invoice payments.
The future is digital
Some people believe that automation will replace people, but this is not true. You are simply freeing employees from certain administrative tasks and allowing them to concentrate on more strategic and valuable ones
Supporting the entire construction supply chain
For the construction industry to truly experience a digital transformation, it must embrace automation completely, which means all aspects of the construction lifecycle, including those backend functions such as accounts payable that help it to run smoothly.
Quite simply, by adopting e-invoicing you will change the way you do business, become more efficient, support the supply chain, achieve a faster invoice process and strengthen your reputation within the sector.
Want to learn more about trading up to Tradex? Contact our team to request a demonstration.
