In the fast-paced and intricate world of construction, managing expenses efficiently is a paramount challenge. The complex nature of construction projects, coupled with the constant flow of resources and materials, makes expense management a potential source of chaos. Add numerous disparate locations to the mix, and the challenge can become overwhelming. However, with the right strategies in place, construction businesses can regain control over their finances and ensure project success.
Here are some essential tips to help you stay on top of expense management in the construction industry.
Implement a Centralized Expense Management System
To control construction chaos, it's crucial to centralize your expense management efforts. Investing in an advanced expense management platform like Fyle can be a game-changer. Such platforms allow you to consolidate expense data, capture receipts, and track expenditures in a single, organized location. This centralization promotes accuracy, eliminates redundancy, and provides real-time insights into project costs.
Ensure that the platform you are considering works well in the construction industry. Here are some key features to look out for:
- Tracking project-related details like job codes, cost codes, employee names and more
- Real-time expense and bank feed
- Automatic expense categorization
- Bi-directional optimization to your existing bookkeeping software like QuickBooks Online
- Extensive reporting capabilities
Go paperless
Collecting, sorting, and processing physical receipts from multiple sites is a definition of chaos. According to research, modern paperless receipt management can save you up to 48% of time and 58% in processing costs (JPMorgan) spent doing manual work. Paperless receipt management not only saves valuable time but also helps improve the timeliness and accuracy of data in your accounting systems. Modern expense management solutions even allow you to collect and log receipts via the apps you already use, like SMS, Slack, or an email app.
Set Clear Expense Policies and Guidelines
Establishing comprehensive expense policies and guidelines is a proactive measure to prevent chaos and can save you up to 50% of money lost due to fraud (ACFE). Clearly define what expenses are eligible for reimbursement, which costs require approval, and how receipts should be submitted. By setting these standards, you ensure consistency and transparency in expense reporting across your construction projects.
Automate Expense Data Entry
Manual data entry can be a breeding ground for errors and inefficiencies. Embrace automation to streamline the expense reporting process. Platforms like Fyle leverage AI and machine learning to automatically categorize expenses, reducing the risk of human error and freeing up valuable time for your team.
Enforce Real-Time Expense Reporting
Waiting until the end of the month to reconcile credit card expenses can lead to surprises and budget overruns. Encourage real-time expense reporting among your team members. Modern expense management tools like Fyle connect directly to card networks like Mastercard and Visa to bring transaction data into your expense management system as soon as your credit card is swiped. Employees instantly receive instant text notifications for every corporate card transaction. They can reply to the text with a picture of the receipt, and Fyle will automatically match it to the correct transaction. What initially took days or weeks can now be done in less than 2 minutes with Fyle!
Also Read:
- Real-Time Credit Card Feeds for the Construction Industry
- What Are Real-Time Feeds, and Why Do They Matter
Customize Approval Workflows
Construction projects involve multiple stakeholders and varying levels of approvals. Customize your approval workflows to match your organization's hierarchy and project structure. This customization prevents delays, ensures accountability, and keeps your projects on schedule. Yet again, adopting a robust app can help this process immensely. They allow approvers to view, edit, approve or send back expense requests and reports from a centralized place, accessible anywhere.
Regularly Review and Analyze Expenses
Industry leaders are 44% more likely to institute a formal expense-auditing team (Aberdeen Group). A proactive approach to expense management involves regular review and analysis. Use your expense management platform to generate reports and insights. Identify spending patterns, cost-saving opportunities, and potential areas for optimization. By consistently reviewing expenses, you can make informed decisions that contribute to overall project efficiency.
Stay Compliant with Regulations
The construction industry is subject to various regulations and compliance standards. Failing to adhere to these rules can result in costly penalties. Utilize expense management solutions like Fyle that incorporate compliance checks, ensuring that expenses align with industry and company regulations.
Educate and Train Your Team
Empower your team members with the knowledge and skills they need to manage expenses effectively. Ensure expense capturing workflows are clear and easy to execute, conduct regular training sessions on your chosen expense management system, policy updates, and best practices. A well-informed team is more likely to contribute to a smooth expense management process.
Concluding Thoughts
Controlling construction chaos through effective expense management is not an insurmountable challenge. By implementing centralized systems, setting clear guidelines, leveraging automation, and promoting real-time reporting, construction businesses can regain control over their finances. With tools like Fyle, construction companies can streamline processes, optimize resource allocation, and ensure project success while staying ahead in the dynamic construction landscape.
Schedule a demo today to find out how Fyle can help your organization!
