Technology is helping construction companies improve cash flow and reduce late payments – offering greater financial resilience and enhanced business health in a challenging economy.
In the fast-paced and dynamic world of construction, staying ahead of the curve is crucial for businesses aiming to thrive and flourish. Our recent research highlights the powerful impact of digital adoption on the construction industry, indicating that it could be the key to decreasing the rate of insolvency and enhancing overall business health. The Resilience In Construction Research Report for 2023 sheds light on how construction technology is helping companies improve cash flow, reduce late payments, and ultimately foster greater resilience amidst a challenging economic landscape.
The challenge: insolvency on the rise in the construction sector
The construction sector has been navigating turbulent waters, with the aftermath of pandemic-related economic support and surging inflation adding pressure to an already competitive marketplace. Recent data unveiled by the Australian Securities and Investments Commission (ASIC) indicates that over 7,500 companies underwent administration or appointed external controllers in the 2022-2023 financial year, underscoring the urgency for innovative solutions to address the rise in insolvency.
The role of digital adoption
The report emphasises how enhanced digital adoption could reduce the construction industry’s insolvency rate by bolstering cash flow management and streamlining financial processes. Among construction companies’ challenges, late payments remain a persistent issue, impacting a substantial 27% of businesses. However, the research highlights that digitally advanced companies, leveraging solutions like Payapps, exhibit remarkable cash flow management capabilities, with only 11% reporting struggles and an impressive 47% boasting excellent financial management.
The power of a well-integrated technology ecosystem
Brett Stephenson, Chief Revenue Officer at Payapps, emphasises the transformative potential of technology in cash flow management. He attributes the success of digitally advanced businesses to technology’s ability to automate tasks and streamline workflows, reducing manual efforts and increasing efficiency. Companies with well-integrated construction technology experience faster payment cycles and improved cash flow, a crucial advantage amid challenging market conditions.
Real-time visibility and empowerment
Payapps’ integration with various construction and accounting software empowers thousands of construction companies by providing real-time visibility into project progress, expenses, and financial data. Stephenson emphasises that this heightened visibility allows companies to proactively identify potential issues, make informed decisions, and optimise cash flow for enduring financial stability in the ever-changing construction environment. Automating progress claims and approvals also accelerates payment cycles, enabling companies to maintain healthy cash flow and secure their financial resilience.
Broader resilience benefits
Beyond cash flow management, Payapps’ research shows that digital adoption unlocks numerous resilience benefits beyond cash flow management. The report unveils that digitally advanced businesses demonstrate stronger relationships and reputations with critical stakeholders, positioning them for greater talent retention and attraction. Moreover, these businesses are nearly twice as likely to see productivity boosts, emphasising the all-encompassing advantages of embracing technology.
Conclusion
The Resilience In Construction Research Report for 2023, driven by Payapps’ commitment to innovation, unveils a powerful narrative of digital adoption’s impact on the construction industry. As companies navigate a challenging economic landscape, construction technology like Payapps is emerging as a reliable ally, revolutionising cash flow management, reducing late payments, and fostering overall business resilience. By embracing technology and integrating with various construction and accounting software, businesses can unlock unprecedented visibility, efficiency, and financial stability, ultimately propelling them to lead the way in an ever-evolving sector.
