Are your finance operations slowed by manual data entry and paper trails? For the architecture, engineering, and construction (AEC) industries, where transparency and efficiency are as crucial as accuracy and precision in projects, automating your accounts receivable (AR) and accounts payable (AP) processes is how you can gain key efficiencies and better control of your cash flow. 

Let's take a deep dive into the why, the what, and the how of automating your AR and AP processes.

Debunking the myth of "That's just the way we do it"

Manual AR/AP processing is pervasive at AEC firms for many reasons. From an AR perspective, invoicing can be complex for one. Firms also often need multiple layers of data verification and can even have custom requirements per project that require nuance when it comes time to create and send an invoice. For AP, many vendor invoices can undergo multiple levels of approval, while also ensuring payments are made according to contracts.

For many firms, however, it comes down to a simple resistance to change. How many times have you experienced the phrase “That’s just the way we do it” to explain a reluctance to embrace innovation? Manual processing is an option for many firms simply because they haven't been exposed to a better, more effective way of managing invoices.

But the attitude of doing things one way because that's the way you've always done them is a dangerous – and potentially costly – one to hold. This antiquated approach is a catalyst for inefficiency. Email chains, spreadsheets, and tedious cross-referencing can lead to errors, missed payments, and prolonged days in AR. 

The price of manual AR/AP processes

When you're stuck in the seemingly never-ending manual AR/AP process loop, it can seem difficult to get out. But breaking free is a must. Here's what you're truly costing yourself as an organization when you stay manual: 

•    Labor-intensive and time-consuming manual processes lead to high operational costs
•    Data processing tends to be prone to errors, potentially damaging client relationships and delaying payments
•    You'll likely experience longer days in AR, harming cash flow and financial planning
•    You can stifle growth, as resources are tied up in uncollected invoices.
•    Worst case, you get upside down with cash flow from a lack of coordination in incoming vs outgoing dollars.

For all of these reasons, automating your AR and AP processes is the way forward. 

The new norm: Automated AR/AP technologies

Having automated, well-defined AR processes can help increase your efficiency in receiving payments. Greater efficiency leads to easier payments, which in turn increases cash flow. For AP, having the ability to quickly process vendor invoices while ensuring timely payments can bolster your consultant relationships while also supporting a healthy bottom line for your firm. 

Automated AR/AP technologies offer a reprieve from the drudgery of manual processing. With spreadsheets and manual tracking, you limit your ability to operate quickly. With tools that use automation. you can align your finance department with your business objectives and customer preferences. You remove the detective work of closing invoices in favor, shortening the overall process. 

Features that empower your accounting department

Of course, "automation" is a popular buzzword when it comes to software. But what does it mean in practice? Remember, not all AR/AP solutions are created equal. Here are the features you should look for in whatever AR/AP automation solution you use:

•    Billing acceleration. Standardize invoicing processes and schedule automatic deliveries to reduce billing cycle times.
•    Online payments. Offer a range of payment options, such as credit cards and electronic fund transfers, to meet customer preferences and expedite payments.
•    Expense scanning. Leverage technology, such as OCR, that scans your AP invoices and automatically submits for needed approvals.
•    Integrated systems. Integrate AR and AP platforms with existing Enterprise Resource Planning (ERP) and project management tools for seamless data sharing and process collaboration.
•    Client portals. Provide a self-service hub for your clients to view, and pay their invoices, leading to increased satisfaction and accelerated payments.

These features don't just help make business easy for you - they're better for your clients  as well. It all leads to a better client experience combined with a more efficient process for your firm. 


The implementation phase: Rolling out AR/AP automation

Implementing AR/AP automation requires a strategic shift that requires thoughtful planning, clear communication, and employee training. 

Prioritize strong project management to oversee the transition and consider phased rollouts for complex systems by taking the following actions first: 

1.    Set clear objectives. Define what success looks like for your firm. Is it a reduction in DSO, an increase in on-time payments, or simply freeing up your team's time for higher-value tasks?
2.    Data cleanse and preparation. Before launching new systems, ensure your data is accurate and complete. This might mean cleaning old records and establishing data governance practices.
3.    Stakeholder communication and training. Your team is at the center of this transformation. Equip them with the knowledge to adopt new tools and workflows effectively.
4.    Roll-out in phases. Tackle one area at a time to manage change effectively and learn from each phase before scaling.


Choosing the right AR/AP solution

Selecting the right AR/AP technology partner can make or break the success of your automation efforts. A strong partner will offer a robust platform, provide excellent support, and grow with your business needs.
When evaluating AR/AP technology providers, consider:

•    Functionality. Does the platform cover all your critical needs, from billing to collections to reporting?
•    Scalability. Can the solution grow with your business, offering the same value whether you're a small shop or a global enterprise?
•    Customer support. What level of ongoing support does the provider offer? Is there a robust user community to tap into for peer help?
•    Integrations: Can the solution integrate with your existing software tools without complex customizations?
Once you've completed your evaluation, you're ready to choose the right partner for you. 


AI/ML in AR/AP: The next frontier

Artificial intelligence (AI) and machine learning (ML) are the next wave in AR/AP automation, promising even higher levels of efficiency and insight. These technologies can sift through massive data sets, identify payment patterns, and predict cash flows with startling accuracy.

AI/ML technologies can:

•    Automatically classify invoices. Reduce manual data entry by using optical character recognition (OCR) to process invoices.
•    Predict payment behaviors. Anticipate when clients are likely to pay and customize follow-up strategies accordingly.
•    Identify payment trends. Provide analytics that highlight potential cash flow bottlenecks and opportunities for improvement.


Ensuring AI readiness in your AEC firm

Adopting AI/ML technology begins with assessing your readiness. Is your data clean and organized? Are your processes standardized and efficient? Ensuring you have a solid foundation is critical for AI to deliver on its promises.

Before you make the leap, ensure you take these steps. 

1.    Standardize processes. AI thrives on consistency. Ensure your workflows are standardized and universally understood to gain maximum benefit.
2.    Invest in data management. Organize your data with clear categorization and storage protocols to fuel AI algorithms effectively.
3.    Engage in a cultural shift. Foster a culture of data-driven decision-making and continuous improvement to create an environment where AI can flourish.
4.    Prioritize security. With AI comes the need for heightened data security. Invest in robust cybersecurity measures to protect sensitive financial information.

Automating your AR and AP processes helps you save time and gain more control over your cash flow. It also helps you level up the service you provide to your clients and bolsters your financial viability in an increasingly competitive market. Using the latest technology to empower your firm, automated AR and AP is the key to getting paid faster, more reliably, and with less effort. 

Lucas Hayden is Senior Director of AEC Strategy for Unanet, a leading provider of project-based ERP and CRM solutions purpose-built for architecture, engineering, and construction firms, and government contractors.