How to Improve Your Construction Billing Process

Blair Chenault
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For contractors working on a complex construction project, billing complications are an expected part of the process. Unfortunately, this means that every general contractor and subcontractor on the project are expecting delays that slow down work and payments that arrive late. No other industry operates this way. So, why should construction employees face these issues?

Unfortunately, the nature of construction projects can lead to a slow payment process. Bidding on a project, followed by purchase orders and change orders while the job is in progress, requires many working parts to get the necessary approvals for each expense. This leads to inevitable delays in progress and payments for workers. Slow payments aren't only causing delays. They're costing general contractors billions of dollars each year. It may seem like there's no easy answer to the problem, but there are simple steps you can take to improve your construction billing process. Try these tips to streamline your billing process and make sure everyone gets paid on time.

Pinpoint the Issues That Slow Things Down

To determine how to fix problems in your construction billing process, you need to get to the root of the problem. Do late pay apps prevent you from having the overhead necessary to confidently bid on the next job? Do projects frequently grind to a halt when purchase orders need approval? Are lien waivers and change orders slow to arrive or lost, requiring an endless circle of phone tag and email chains to get things moving again? 

For many construction companies, all of these scenarios are common. Creating a customized construction billing process can help you tackle the specific problems faced by your teams.

Create a Billing Schedule

Construction is a busy industry, and fieldwork is what keeps your organization moving forward. While this may be true, the billing process is what keeps the money flowing to finance massive construction projects. Set aside specific days each month dedicated to billing. During these days, the billing team shouldn't schedule meetings, bids, or other tasks. As all members of the team become accustomed to these billing days, pay apps and other documents are more likely to arrive on time.

Invest in Construction Billing Software

Pay apps consist of several vital documents. So creating each of these documents manually invites errors that often lead to a repeat of the entire process. Construction billing software designed for the complex payment process within the construction industry provides a variety of benefits to streamline the process and eliminate errors. For instance, billing software can help you:

As you set up your billing schedule and also introduce customized construction billing software to your network, the software can help dictate a natural billing process. Since construction billing software includes a workflow for creating invoices, the billing team will receive an alert to collect documents before the billing process begins. This means you'll finally have a way to avoid chasing down missing lien waivers and pay apps at the last minute.

Create an Early Deadline for Documents

Once you've created standardized documents for every step of the billing process, it's easier for contractors and subcontractors to submit pay apps and other documents on time. Instead of waiting for billing, set an early deadline for all documents to be submitted to allow for proper review before the billing process begins. With the right software in place, you can streamline this process with automated reminders for pay apps, paperless document transfers, and e-signatures for immediate approvals.

Assign Positions

Every construction project includes contractors, subcontractors, and vendors. The payment process adds HR and accounts payable into the mix. With so many working parts and approved payments involved, the billing process can feel like a free-for-all that completely fails to work in harmony. Once you've established the steps your company needs for a smooth billing process, assign employees to complete different tasks. Begin by listing all tasks your software can automate. Then divide the remaining jobs between personnel most qualified to complete each task.

Write Everything Down

Client reviewing well-documented invoices as part of the construction billing process

When you create a billing process that works for your company, write down each step and the person responsible for completing each task. Include directions for each part of the process, including working out discrepancies and temporary fill-in personnel for vital tasks. Step-by-step directions or diagrams can help new employees quickly learn the process. It can also keep everyone on track for prompt pay app submissions and on-time payments.

Assess and Improve

When creating any new process, there will be errors and issues. Each company is different, and creating your customized billing process could take some time. As your team adjusts to the process, hold routine meetings to address concerns and smooth out problems. If all your objectives aren't being met, then seek new tasks to implement into your process. Alternatively, contact your software provider to learn more about the ways your construction billing software can make your job easier.

Setting up a construction billing process can feel like traveling on uncharted territory. But it's not difficult to complete with the assistance of billing software designed for the industry. Poor payment processes lead to:

  • Missed bids
  • Overextended budgets
  • Missed deadlines
  • Delayed work
  • Math errors
  • Late payments
  • Lost funds

In the past, these challenges have been accepted as part of working in the industry. Today's technology finally provides companies with the opportunity to change the billing process. Cloud-based software improves communication, streamlines the billing process, and allows contractors to work with data in real-time.

Software designed for the construction industry is key to creating a better billing process that will eliminate the problems that have long plagued the construction industry. Flashtract enables teams with a unique construction billing solution that addresses the issues slowing down the billing process. 

Instead of worrying about missing documents, unapproved change orders, and limited overhead to complete a project, you can have every document standardized and arriving on time. Furthermore, the software is so easy to use that your subcontractors will be happy to implement it into the system. To learn more about improving your construction billing process with Flashtract, sign up for a free demo or give us a call to get started.

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