How to Tame the Construction Billing Cycle with Software
Well-managed. Quick. Easy.
Not the terms that come to mind when you think of your construction billing processes?
Then what you’ve got on your hands is a bit of good news, bad news situation.
The bottom line is that construction billing is complicated and unwieldy. But at least it’s an equal opportunity pain-in-the-neck. Your competitors have to deal with it too!
If you are struggling with your billing processes, the bad news part is that you’re facing a significant issue that’s driving up costs and hurting your ability to satisfy customers. But the good news is that once you’ve tackled the issue with the right software, you’ve acquired a major competitive advantage—especially when you consider the general reluctance among your industry peers to strategically invest in IT.
Examining the construction billing cycle
The crux of the problem when it comes to construction billing is the complexity of the process.
Even in a simplified model of the construction billing cycle—excluding change orders or multiple revisions of negotiated contracts—the need for functional integration throughout the complex, multi-step process is evident:
Putting the pieces together: Patching the fragmented construction billing cycle
Historically, contractors have faced a few major issues overcoming the complexity of the construction billing cycle. The biggest issues have related to fragmentation in systems and access.
Three major technical trends have introduced solutions to patch the natural fragmentation of the billing cycle:
- Widespread mobile access has connected the field and the office;
- The development of end-to-end construction billing systems and improved APIs for application specific products have improved functional integration within the billing cycle;
- An emphasis on business intelligence reporting has made historical benchmarking an achievable standard practice—helping to apply the lessons of the past to the present.
The reality is that many integrated, easy-to-use, and field accessible billing systems already exist. And, they’re helping contractors achieve some critical business objectives:
- Saving administrative time;
- Decreasing AR cycle time;
- Eliminating scheduling delays;
- Coordinating better resource access;
- Improving communication with customers and subs;
- Allowing for more accurate job estimating.
Eight attributes to look for in construction billing systems
Because of the cross-functional nature of construction billing systems, assessing and comparing individual software options can be overwhelming. There’s simply a lot of functionality to consider.
A good place to start is to begin by considering how fully each software program accomplishes certain ideal system characteristics. There are no fewer than eight key system attributes you should be looking for when considering your software choices.
Integration is a key functional objective. Being able to transfer data and even convert documents from one type to the next within the billing cycle helps achieve a number of critical business goals. Integration between modules reduces the chance for data errors, minimises the amount of required administrative labour, and helps maintain a single version of the truth when it comes to all project billing data.
How transparent and easily accessible is the data? It’s one of the important questions to consider when you evaluate different software solutions. Strong search utilities, archiving functionality, versioning, and customizable report views are all examples of system-wide attributes which determine the degree to which you’ll be able to have strong visibility into your data.
Who can access what in the software? Sharing the same level of access for executives, accounting, project managers, field staff, and even subcontractors generally isn’t an option. A key difference between systems is the granularity with which you can control functional access. It’s also important to look at which tasks can be specifically defined to require approvals.
At the heart of every software initiative is a desire for automation. When it comes to billing, there are many opportunities for it. The more opportunities seized, the greater the ROI and the lower the chance of human error. To evaluate automation, start by looking for 3 things: the ease of document conversion, calculation utilities, and the ability to see changes made in one area reflected across the system.
Closely related to automation capabilities are ease-of-use considerations. It’s not just what the software can do, but the degree of difficulty required to do it. A good way to compare ease-of-use is to count the steps required to a standard system task (adding a new user, perhaps). The organisation of menus and other GUI elements and access to help functions should be part of the ease-of-use evaluation as well.
Construction billing is dynamic. Change orders, contract negotiations, cost variations, and percentage completion billing all inject elements of the unknown into the billing of each project. Also, different pricing models are appropriate for different types of work. Understanding how each software system adapts to these changes is fundamental to determining their applicability for your needs.
7. Remote access
Mobile access to construction billing functionality is rapidly moving from a nice-to-have to must-have status. Project managers are frequently out of the office and the flexibility of anywhere, anytime access provides a major software benefit. The ability to capture costs and affect changes to order and quote while in the field are particularly valuable to most contractors.
Given the complexity of the construction billing cycle, it’s easy to overlook the fact that billing systems also play a role in presenting your company’s professional image. Customer quotes, contracts, and invoices aren’t only responsible for clearly communicating information. Templating and customisation tools can also help ensure that customer-facing documents provide a professional, polished impression.
Evaluating functional modules within the billing system
A complete billing system is really a combination of a number of different functional modules. For a deeper dive into the features offered in each sub-component the billing system, check out Find Accounting Software’s guides:
However, as a starting point, you may want to consider some of the key feature differentiators in each module:
Broadening the scope
As complex as the construction billing cycle is, the reality is that it’s just one interconnected part of a larger set of construction management efforts:
Project management suites can be used to manage both work and billing activities.
Billing data often must be able to flow to customer relationship management(CRM) systems.
Ultimately, it’s not enough simply to integrate the billing process. In order to maximize efficiency and transparency, billing data needs to be able to freely move in and out of a variety of construction management applications.
Data management issues often become acute in the complex billing cycle first. But end-to-end construction ERP systems can help alleviate similar issues in other functional areas and are worth considering as part of your larger efforts to put software to work toward the end-goal of running a more efficient and effective business.
Environment Agency clamps down on plastic films and wraps
Businesses in the waste and construction industries must ensure they deal with waste plastic properly to stop illegal exports, the Environment Agency (EA) has warned.
The warning comes as the Agency is increasingly aware of plastic film and wrap from the construction and demolition sector being illegally exported.
Exports are frequently being classified as ‘green list’ waste of low risk to the environment, but are often contaminated with materials such as mud, sand, bricks and wood, posing a risk to the environment and human health overseas, and undermining legitimate businesses in the UK seeking to recover such waste properly.
During the last year, the EA has intercepted shipments to prevent the illegal export of this material on numerous occasions. The Agency inspected 1,889 containers at English ports and stopped 463 being illegally exported. This, combined with regulatory intervention upstream at sites, prevented the illegal export of nearly 23,000 tonnes of waste.
Those convicted of illegally exporting waste face an unlimited fine and a two-year jail sentence. But construction firms could also face enforcement action if contaminated construction and demolition waste plastic is illegally exported.
Malcolm Lythgo, Head of Waste Regulation at the Environment Agency, said it is seeing a marked increase in the number of highly contaminated plastic film and wrap shipments from the construction and demolition industry being stopped by officers.
“I would strongly urge businesses to observe their legal responsibility to ensure waste is processed appropriately, so we can protect human health and the environment now and for future generations. It’s not enough just to give your waste to someone else - even a registered carrier. You need to know where your waste will ultimately end up to know it’s been handled properly. We want to work constructively with those in the construction and waste sectors so they can operate compliantly, but we will not hesitate to clamp down on those who show disregard for the environment and the law.”
There are a number of simple, practical steps that businesses can take to ensure that C&D site waste is handled legally.
Construction businesses should check what’s in their waste
- Different waste types need different treatments and so must be correctly categorised to ensure it goes to a site that is authorised to handle it safely. Businesses can also check if their waste is hazardous as different rules might apply.
- If you are removing the waste yourself, you must be a registered waste carrier- registration can be carried out here. When a waste collector is transporting your site waste, you must check they have a waste carrier’s licence from the EA.
- You must also check that the end destination site any waste is taken to is permitted to accept it and has the right authorisations in place. Keep a record of any waste that leaves your site by completing a waste transfer note or a consignment note for hazardous waste which record what and how much waste you have handed over and where it is going.
Waste management industry must adhere to export controls
- Contaminated C&D waste plastic - including low-density polyethylene (LDPE) wrap and film - must be exported with prior consent from the EA as well as competent authorities in transit and destination countries.
- Those involved in the export of such waste must ensure that it meets the requirements set under the relevant export controls, such as being almost free-from contamination; the destination sites are appropriately licensed to receive and treat the waste; and waste is correctly managed once received.
The EA will continue to actively target those who export contaminated C&D plastic waste illegally, including any accredited packaging exporters who issue Packaging Waste Export Recovery Notes (PERNs) against such material in breach of their Conditions of Accreditation.
Businesses involved in the shipment of waste are required to take all necessary steps to ensure the waste they ship is managed in an environmentally sound manner throughout its shipment and during its recycling.
Anyone with information regarding the illegal export of waste including C&D waste plastics can contact the EA’s Illegal Waste Exports team at: [email protected] or anonymously via Crimestoppers on 0800 555 111 or via their website