5 Tech Trends in Construction Finance Departments

This article is sponsored by AvidXchange.

The construction industry is undergoing a significant evolution driven by forces including:

A changing workforce
Economic volatility
Supply chain complexities
Escalating materials costs

Businesses are challenged to adjust to these shifting industry dynamics. As a way to adapt, many construction companies are integrating technology that helps create operational efficiencies and facilitate organizational change.

This article examines the most popular technologies in construction back offices today and explores how organizations are using them to their advantage.

Artificial Intelligence (AI)

AI is revolutionizing most industries, including construction. In the back office, it can help companies save money and shape efficient processes. A recent AvidXchange survey found that 72% of organizations are currently using AI in the finance department.

Many construction firms are utilizing AI-powered accounts payable (A/P) automation software to help process high volumes of invoices through complex approval workflows.

AI can extract and validate invoice data, reducing errors and increasing the accuracy and speed of invoice processing. AI tools can also automate invoice matching and highlight potentially fraudulent invoices for further review.

AI-powered A/P solutions route invoices to the appropriate approvers based on predefined rules and workflow. They can even send reminders and notifications to accelerate approvals. These tools shrink the cycle time and cost of invoice processing.

Ultimately, AI-powered A/P solutions allow construction businesses to leverage speedy invoice processing and payment to improve relationships and negotiate early payment discounts with suppliers, optimizing working capital.

Data Analytics

In today’s rapidly evolving business environment, finance departments are asked to deliver detailed reporting to stakeholders more often. Access to real-time data analytics is essential to provide the reporting and analysis construction firms need to stay competitive.

In September 2023, AvidXchange conducted a 2024 Trends Survey to learn the top priorities of 500 finance executives, which found that 66% of survey respondents said their teams currently have access to real-time data analytics to support business analysis, and 20% said they plan to adopt real-time analytics this year.

The survey found that organizations most frequently use data analytics to inform decision-making. A/P teams specifically use data analysis tools to analyze invoice data, measure invoice and payment workflows, and track purchasing payments, according to the 2024 Trends Survey.

Overall, data analytics empower the agility and foresight construction firms need to remain competitive today.

Cloud Computing

The 2024 Trends Survey uncovered that 80% of finance teams are working in hybrid or fully remote environments. This means they require cloud-based systems to ensure teammates can access the information they need regardless of location.

Cloud-based systems are particularly essential in the construction industry, where teams may be spread across locations and jobsites. These systems enhance collaboration, streamline communication, and provide real-time access to project data.

Cloud-based technology improves efficiency for construction firms by enabling teams to access critical information anytime, anywhere, leading to improved project management and overall productivity. Additionally, cloud computing offers better scalability and cost-effectiveness compared to local systems.

Real-time Payments

Real-time payments empower nearly instantaneous processing and settlement of transactions, giving vendors immediate access to funds. Real-time payments are revolutionizing traditional banking models, setting a high bar for speed, convenience, and accessibility.

In the dynamic construction environment, where financial transactions are numerous, delays can impede progress and strain relationships with suppliers and subcontractors. Real-time payments improve liquidity, enabling swift settlements and reducing the risk of project disruptions.

Real-time payments ultimately enhance the financial health of construction firms and strengthen partnerships. In the 2024 Trends Survey, 81% of respondents said they’ve seen increased requests from vendors for real-time payments over the past year.

Cybersecurity

Construction back offices handle sensitive financial data, project details, and client information, making them attractive targets for cybercriminals. Breaches can lead to ransom attacks or identity theft, which may result in substantial financial losses and require significant resources to resolve.

According to the 2024 Trends Survey, 57% of organizations have been the victim of check fraud attacks and attempts, while 60% have experienced cyberattacks. It’s no wonder that 64% of respondents said their business strengthened security measures in 2023 and 20% have plans to do so in 2024.

Robust cybersecurity measures — including firewalls, encryption, and regular system audits — mitigate security threats, protecting sensitive financial information and preventing fraudulent activities. Proactive cybersecurity not only safeguards financial assets, but also upholds the trust of clients and stakeholders, reinforcing the integrity of the business.

Final Thoughts

For construction finance departments, investing in technology is crucial for modernizing operations and ensuring sustained success. Technology streamlines complex processes, reducing errors and expediting tasks.