This article is sponsored by Commerce Bank.
Despite recent growth, the construction industry still faces unique challenges. This article provides insights on trends around workforce shortages and payments automation in construction.
Recent reports show good news in the construction industry — spending was up across most nonresidential categories in April, even in the face of recession fears.
Spending on nonresidential construction totaled $1.05 trillion in April on a seasonally adjusted basis, according to an Associated Builders and Contractors (ABC) analysis of data published by the U.S. Census Bureau on June 1. That’s up 1.9% from March and up 25.3% from April 2022.
“Manufacturing-related construction spending growth continues to lead the way, but even segments that had been weak (such as lodging) are picking up steam,” ABC’s chief economist, Anirban Basu, said in the announcement.
Navigating Some Common Challenges Facing the Construction Industry
But this ongoing growth often comes with some challenges. Many construction contractors continue to struggle to find all the staff they need to meet demand, and while there is substantial public funding lined up for future projects, tighter credit conditions and inflationary pressures are a concern. It also is an industry with complex operations.
Tackling the Urgent Labor Shortage of Construction Workers
One of the more complicated areas of construction is payroll management, especially given the shortage of certified payroll specialists.
“It’s not uncommon for specialty contractors in the $100 million and higher revenue range to work with 10, 15, 20 different wage scales, based on union affiliations or prevailing wage jobs,” Nick Hadley, Vice President for Commerce Bank’s Engineering and Construction Services Group, said. “This can be a major strain on the financial arm of any organization. Using a comprehensive review of an organization’s cash flow cycle, we can suggest ways to create efficiencies that allow organizations to shift resources in those high demand areas.”
It’s no secret the national labor shortage has heavily impacted the construction industry, but the shortage doesn’t just affect the field. Craig Higginbotham, Vice President and National Sales Manager of the Construction Payments Division at Commerce Bank, said the in-office shortage on the professional services side of construction is also a common issue.
Tech-Driven Solutions in Construction
As a company grows and needs more help in accounts receivable and accounts payable, for example, it needs solutions other than hiring more hard-to-find employees.
Another complexity within the construction industry is the continued reliance on writing and receiving paper checks and other manual processes that have yet to cross over into tech-driven automation. When COVID-19 shut down workplaces, it became urgent for many companies that couldn’t follow their existing processes without being physically in the office.
“Our conversations shifted to how contractors could use technology to automate everything from invoice capture all the way through payment processing, and understanding the need to integrate into their existing financial systems,” Higginbotham said.
“Construction financial professionals are leaning into technology to enhance their payment processes.”
At Commerce Bank, we look at challenges as opportunities to innovate and see disruption as a chance to uncover new ways to add value. We value long-term relationships and strive to know your business well. We are ready to take on challenges and opportunities together, offering creative solutions to the challenges you face every day. Learn more at commercebank.com/BuiltForBusiness.