The construction sector faces a maze of challenges in 2024 that could potentially derail project schedules, escalate costs, and thin out profit margins. Recognizing these obstacles is the first step toward navigating them successfully.
In this blog, we'll delve into the main challenges facing construction teams this year – and share how finance software like accounts payable and accounts receivable automation can help your team streamline its financial operations and maximize operational efficiencies. Without further ado, let’s jump right in.
4 Pressing Challenges for Construction Companies in 2024
The construction industry is evolving rapidly, and companies must stay agile in order to remain competitive and ensure project success. As the industry faces price hikes for both materials and labor costs, teams are searching for ways to do more with less.
Here’s a snapshot of additional hurdles that construction companies are tackling this year:
1. Project Cost Tracking and Recoupment
Construction projects are notorious for their fluidity, with costs and parameters frequently changing, leading to unexpected expenses.
The manual processing of invoices associated with these changes is prone to human errors, time-consuming adjustments, and potentially overlooked expenses, all of which can negatively impact your project’s profitability and your company’s cash flow.
Centime’s accounts payable solution simplifies your invoice processing with AI-powered invoice capture and coding, and payment order matching capabilities. By automating invoice processing, the system can accurately track costs, streamline the recoupment process and safeguard your project margins.
2. Optimizing Cash Flow
In today's construction landscape where costs are continually rising, maintaining a healthy cash flow has become absolutely crucial for businesses. Yet, the average construction company still has to wait over three months to get paid.
Centime alleviates this challenge by helping businesses get paid 30% faster, all thanks to our advanced collections automation and user-friendly customer payment portal. The portal not only offers convenient electronic payment options but also improves the overall payment experience for customers, leading to higher satisfaction and quicker payment turnaround times.
3. Mitigating Cyber Fraud Risks
Did you know that 65% of businesses suffered from a payment fraud attack/attempt in 2022?
As digital transactions become more prevalent, the construction industry is increasingly vulnerable to cyber fraud. Without adequate safeguards, companies face the risk of financial and reputational damage due to various forms of fraud.
Centime's automation software includes features designed to reduce exposure to fraud, increasing control, visibility, and auditability of transactions, thus offering a critical layer of protection in today’s digital landscape.
4. Inefficient Payment Processes
Construction companies frequently grapple with the challenges posed by inefficient payment processes. While it may seem like a minor inconvenience on the surface, slow and error-prone payment processing may lead to late payments, which can ultimately result in blocked accounts and costly late fees.
This directly impacts your company's cash flow, creating a domino effect that strains vendor relationships and jeopardizes your supply chain. Late payments erode trust with your vendors, who may become less inclined to provide favorable lending terms in the future or, in the worst case, may decide to cease business relations altogether.
Centime's AP automation streamlines your payments and enables your team to capture 97% of early payment discounts, thereby turning a problematic area into a source of savings. The platform further amplifies efficiency with secure and flexible electronic vendor payments, offering flexibility and control while streamlining your overall payment process.
Conclusion
As we navigate through the complexities of 2024, it's clear that the construction sector is at a critical juncture.
Faced with evolving challenges, from fluctuating project costs to maintaining healthy cash flows amidst rising expenses, construction companies must adapt swiftly to stay afloat and thrive.
The hurdles highlighted in this blog underscore the necessity for innovative financial management strategies.
Solutions like Centime's accounts payable and receivable automation emerge as vital tools, bolstering efficiency and security in these turbulent times. By embracing such technologies, construction teams can not only overcome the immediate obstacles but also lay a solid foundation for sustainable growth and profitability.
In an era marked by rapid change and uncertainty, leveraging the right financial tools is no longer optional but essential for any construction company aiming for success in 2024 and beyond.
