Managing Growth With A Scalable Payment Platform
by Matt Scroggins, Textura Corporation
As the U.S. economy continues to recover from the 2008 financial panic and ensuing recession, nearly all U.S. businesses still face uncertainty over their future.
While downsizing is largely a thing of the past and optimism is rising, there is little incentive to invest in new hiring even when backlogs and new business pipelines start to improve. And while few companies would take on new work without sufficient project management staff, labor supervision or client-facing personnel, there may be a reluctance to hire additional accounting staff that may not be needed once the project is complete.
What can a contractor do to manage the ups and downs inherent to the construction industry and exacerbated by the economy? One answer is to use technology to create a scalable platform to help manage new projects. In particular, a Software as a Service (SaaS) model with volume-based pricing can move costs that have historically been fixed (administrative, project accounting, accounts payable personnel) to variable costs. This does not necessarily mean that a company needs to reduce headcount to realize savings. If project count is growing, technology can be used to eliminate administrative tasks and allow, for example, a project accountant to handle 20 jobs at a time instead of three. During a growth cycle, this allows an organization to take on work without increasing staff. In a flat or decreasing revenue environment, staff can be redeployed to higher-value functions or used to replace open positions created by attrition.
For centuries, technology has promised to provide business efficiency and lead to competitive advantages for adopters. The Internet has changed retailing, travel booking and a host of other services. In the construction industry, the uptake on technology has been slow. Nearly every contractor now uses an ERP system for accounting and other functions. CAD and more recently, BIM have won over design. However, much of the industry remains mired in archaic process and paper. In a world of personal online banking, checks remain the standard for paying subcontractors and suppliers. Invoices are created on everything from a cocktail napkin to a spreadsheet. Wet signatures and notarization are still the standard for many critical legal documents.
But there is technology that helps contractors replace paper checks and signed and notarized legal documents with electronic payments and electronically signed documents, speeding up the flow of money on construction projects, reducing risk for all parties and eliminating hundreds of thousands of man-hours associated with pushing paper. The result has been more efficient projects, more valuable employees and lower costs to project owners. New technologies have helped the construction industry’s back office reduce their cost and focus their energy on high value activities by eliminating much of the construction paper chase. At the same time, contractors have gained a sense of comfort knowing that their costs will scale up and down with their revenue.