It’s no secret that we’re living through a challenging economic climate. While experts split hairs as to whether we’re approaching a recession, factors such as rising labor costs, accelerating inflation and volatile energy and lumber prices are no doubt making business difficult for construction companies as cash flow becomes tighter and tighter.

On top of this, construction companies have to contend with supply chain challenges and an economic cycle that may very well translate into fewer jobs and opportunities.

While the C-suite works to prepare for any economic eventuality, one department could provide crucial support during this transitory period: Accounts Payable (AP). By deploying AP automation, AP teams do more work with fewer people. As a result, construction companies that take this opportunity to modernize their AP departments will be in a better position to weather today’s economic downturn—and in a better position to thrive once the economy heats back up.

With all this in mind, there are three key reasons AP automation can help construction companies overcome economic challenges and protect profitability in today’s difficult business landscape.

1. Increasing AP Productivity

AP automation technology enables construction companies to bake significant new efficiencies into the foundation of their AP departments. As a result, AP teams can accomplish more with fewer resources and in less time.

As most accounts payable professionals know too well, invoice exceptions are a major pain. Not only do they slow down workflows with manual resolution and frustrated workers, but they also result in higher operational costs and payment errors.

By automating AP, it’s possible to eliminate invoice exceptions altogether and achieve 100% straight-through processing. In fact, leading solutions can even conduct three-way matches autonomously, comparing purchase orders, goods receipts and invoices to find information that’s erroneous and automatically correct it.

Keep in mind that best-in-class automation solutions don’t just stop with invoices. They can also handle purchase orders, purchase order acknowledgments and advanced ship notices, speeding up critical AP workflows even more. By prioritizing the modernization of the AP department today, construction companies can put themselves in a position to scale once the economy rebounds, and they won’t have to hire more AP professionals to accommodate the increased volume. The AP automation platform will take care of all of that on their behalf.

2. Improving Cash Flow

To keep operations humming along, construction companies need strong cash flow. When the cash river runs dry, it’s that much harder to acquire building materials and pay workers. Any extra activity—such as marketing the business—becomes an afterthought.

With an AP automation solution in place, teams have complete visibility into all invoices and outgoing payments. As a result, they’re able to optimize their cash flow by ensuring they take advantage of every early payment discount and withhold other payments until the day they’re due to avoid late payment penalties.

By creating a more efficient AP department that requires fewer people and has lower operational costs and balancing payments to maximize discounts when possible, construction companies can strengthen their cash positions considerably.

3. Forming a Direct Digital Connection With Suppliers

AP automation enables construction companies to create and maintain direct digital connections with each of their suppliers. As a result, they get complete visibility into the entire AP process end to end—and suppliers do too.

Once they form the connection, AP becomes easier. Whenever suppliers have a question about payment, they can view the information in a portal and self-serve that information at their leisure. They won’t be calling the AP team over and over again, meaning the team won’t have to answer the same questions often and will have more time to focus on other important areas of operations.

With a direct digital connection established, AP teams have near real-time visibility into outstanding payables at any given time; there aren’t a bunch of invoices sitting on someone’s desk at the end of the month. At the same time, AP automation also puts strong reporting and analytics capabilities in the hands of the whole team, which makes it easier to transform into a data-driven operation and make better and better decisions.

Prepare for Any Economy With AP Automation

While construction executives would likely sleep better at night in a healthier economy, today’s challenging climate presents the perfect opportunity for forward-thinking leaders to build more resilient businesses. By deciding to modernize AP with purpose-built automation tools, construction companies can put themselves in a position to ride out the economic storm and capitalize even further when the next uptick occurs.