The construction industry is known for its challenges in managing payments due to its reliance on paper-based processes. This can lead to delays, errors, and disputes that negatively impact businesses. In today’s fast-paced environment, B2B customers expect quick and efficient payment processing, which is why the industry needs to prioritise digital payment solutions to eliminate payment friction.
In the US alone, there was about a 53% increase in late payments across the construction industry in 2022. By embracing digital payment platforms, construction firms can streamline their payment processes and improve efficiency.
Why are there late payments in the construction industry?
Payments can be complex for construction businesses, especially when contractors, suppliers, and subcontractors are involved. These parties often have different payment terms and schedules, which can cause confusion and delays in payment processing.
In Australia, the construction sector has been hit hard by recent collapses of ‘zombie businesses’, causing further payment delays or even bad debts for suppliers in the industry.
Construction companies can easily manage these complexities with a digital payment platform integrated into accounts receivable software.
However, despite the benefits of digital payment solutions, many businesses in the construction industry still need to rely on paper-based processes. This is due to a need for more awareness of the available payment solutions or concerns around cost. But the truth is the cost of implementing a digital payment platform is negligible compared to its benefits.
Benefits of digital payment platforms to construction businesses
Timely payment processing is critical to maintaining a healthy cash flow. With a digital payment platform for B2B, construction businesses can improve their cash flow by getting paid faster and reducing payment delays.
Automating payments and account receivables can help construction businesses better manage their finances, pay their bills on time, and reinvest in their operations.
1. Get paid faster and reduce the likelihood of payment delays or disputes.
Using digital payments can help businesses get paid faster and reduce the likelihood of payment delays or disputes by offering a range of payment options and making it easy for customers to pay.
2. Easily create customised direct debit payment schedules.
Customized direct debit payment schedules allow businesses to set up regular payments – saving time and effort in chasing payments. This also helps customers pay on time and improve their payment behaviour.
3. Automate payment reminders and pay from invoices.
Payment reminders can be automated when digital payments are integrated with accounts receivable software. Automated communications help ensure both supplier and customer are on the same page and that payments are made on time. Adding ‘Pay Now’ links to these invoice reminders also helps create frictionless payments, making it even easier for you to receive payments.
4. Use a user-friendly and mobile-responsive payment portal
Digital payment platforms offer a user-friendly and mobile-responsive payment portal, which allows customers to pay easily from any device, whether they are using a desktop computer or a smartphone.
5. Integrate with popular accounting software
Digital payment platforms can integrate with popular accounting software, which helps eliminate data errors and reconciles payments automatically to the invoice, saving time and reducing the chance of errors.
Get paid on time with digital payments
In conclusion, the construction industry must prioritise digital payment solutions to eliminate payment friction and improve efficiency. By embracing digital payment solutions, businesses can improve their cash flow, streamline their payment processes, and remain competitive in the construction industry.
Learn more about how you can get paid faster with a digital payment platform. Speak with one of our payments experts today to learn about options for your business.