Tech Platforms That Make a Credit Manager’s Life Easier

While a strong economy is good news for everyone, the path from a weak economy to a healthier one can be fraught with peril for parties in the construction industry. In fact, it has been shown that the failure rate for subcontractors is three times higher in a recovering economy than a recessed and stagnant economy. One reason is because a growth economy stresses business in many ways that a down-sized market doesn’t. On the bright side, though, there are plenty of cloud-based tools available to empower construction companies to get the benefits of the recovering economy and avoid the bad parts.

Cloud Based Technology & Business Process Automation

New cloud-based platforms have given construction companies the opportunity to automate and optimize business processes that otherwise would put a great strain on their resources. There are four main benefits to using these tools to optimize business processes and take the step into the future of business methods management.

1. It frees up a company’s workforce to focus on its core business rather than wasting time on redundant tasks
2. It positions the company to scale
3. It empowers companies to aggregate data and make smarter decisions
4. Perhaps most importantly, it empowers the company to optimize and leverage business processes that before were obstructive tasks

To examine the optimization of business processes through technology, one can look at some cloud-based automation solutions applicable to construction companies, Billtrust and zlien, and the benefits they offer.

Billtrust: Invoicing is a pain for many businesses, and perversely, it’s a pain that gets worse as business grows. Billtrust automates the billing process and removes it from a company’s to do list. This positions the company to scale, by freeing up time and eliminating the need for internal billing. More importantly, it enables companies to get more out of their invoicing. For example, customer specific optimizations can be made to the invoicing process.

zlien: Companies in the construction industry are automatically granted lien and bond claim rights by law to protect them against non-payment on almost every project. This security right is extraordinarily important in a recovering economy because of the increased insolvency risks and payment problems. However, lien and bond claim rights are really easy to lose if specific timing (and other) requirements are not met.

The in-house processes or traditional service providers many companies use are sub-optimal, mistake prone, and inefficient. zlien automates this process completely, removing it from a company’s consciousness and ensuring they remain in a secured position. zlien can also customize which which notices are sent and when, subject to a customer’s preferences.

Similarly to Billtrust, the automation is nice, but not as important as using data to get more. Through its platform, zlien empowers companies to make data-driven decisions about when these lien rights should and shouldn’t be exercised, to optimize the process for better communication with others on the project, and ultimately, to get paid faster.

Manage the Risk of Another’s Default

As seen above, not only can technology optimize and streamline particular business processes, it can also directly attack the risks presented by other company’s weak financial standing. A big problem in the construction industry is the risk of default by other parties on a project. New technology products can provide a method to mitigate these risks.

As discussed above, zlien is specifically designed to insulate a company from the risks of defaults and insolvencies. By enabling organizations to use data to understand project risks, and stay in a secured position, the risk presented by a default or insolvency situation is greatly reduced.

Other technology products focus on the risk of default of specific project participants. SimpleVerity monitors the default and insolvency risks of contractors in Washington state, and both Experian’s Business Information Services and Creditera are leveraging the new data landscape to provide insight into specific credit risks.

Relationship Management & the Data-Driven Customer CRM

Finally, the construction industry (like most industries) is all about relationships, and Customer Relationship Management (CRM) products are another area in which newly developed technology platforms have made exciting strides. All CRMs share a common goal: to give users control over, and insight into, the customer record.

The construction industry presents an interesting and unique challenge for CRM products due to the unique nature of customer relationships. Your customer might have their own customers on the same project. E.g. you might sell materials to a contractor (your customer), and they in turn install those materials for their customer. Buyers are sellers, and sellers are buyers. Thus, your relationship is just one element within a larger, multi-dimensional set of relationships that fit in a given project. (Our Simple Guide to Financial Risk int he Construction Industry dives into these complex relationships.) This means that “CRM” type needs are present at both the jobsite and in the back office.

One particularly good platform for this type of management is FieldLens, a product that focuses on the relationships between all project participants at the jobsite. By connecting project managers, FieldLens can collect, collate, and organize all of a project’s communications.

An interesting development in the creation of construction CRM technologies is that the business process and workflow software applications are the platforms developing the CRM-type products for the back office. Billtrust, after all, enables the back office to control the customer record by managing all of the invoices and payments for the customer account, and zlien enables organizations to see into the customer relationship to gauge risk and act accordingly.

Cloud-based construction technology is rapidly expanding and provides companies with tools to dramatically improve both their business processes and their bottom lines. Prudent companies will adopt many of these platforms for just these reasons.