In our last blog, we introduced you to Jim Campbell, Vice President of Construction Sales at AvidXchange, Inc. In today’s blog, we present part II of our Q&A with the construction industry expert. We’ll cover topics like technology, B2B fraud, why companies still cling to paper checks, and electronic payment automation.
What does the landscape of the construction industry in 2016 look like?
When we look at business at large, the construction industry is not an early adopter of technology. In the construction industry, some say the greatest invention in the last 100 years was the air gun!
There are ways to increase productivity, but the work – the manual labor – still has to be done. What automation has helped with is the bidding, estimating, and BIM (building information modeling) of the construction business. Companies can better forecast with automation, anticipate conflicts in the building process, and keep track of revisions to design plans and specifications.
Discovering problems early are less costly than discovering problems late in the game. If you’ve got to fix the substructure or a pipe below the surface, it’s a big difference if the concrete has been poured and hardened already. You can’t uncut the grass. With automation, however, construction companies can see these issues before they happen and save money in the process. Project managers are using tablets and other mobile devices out in the field to log accurate data and, in some cases, approve invoices on-site when they know jobs are finished.
How does B2B fraud affect the construction industry? How does automation help reduce it?
The unique thing about B2B fraud in regards to the construction industry is the amount of money we’re dealing with. A lot of money flows through construction companies, which makes it easier to conduct fraud unnoticed. There’s a lot of paper checks, too.
If someone called you up and asked, “Can I have your name, address, bank account number, and, by the way, what does your signature look like?” You would hang up on that person immediately! Yet, that’s exactly the information you provide every single time you mail a check.
I serve on the board for a community bank, and we spend a lot of time talking about fraud and making sure we’re taking all the proper precautions. Automation enforces strict adherence to business rules, which reduces opportunities to commit fraud. We’ve come a long way from those three-part dot matrix checks!
What’s the deal with ePayments? Why are companies still using paper checks?
One phrase you’ll repeatedly hear in the construction industry is, ‘That’s the way we’ve always done it.’ Old habits are hard to break; familiarity breeds comfort. When we get in a routine, we resist change. Electronic payment is by and large a new concept to the construction industry. In our discussions with vendors, we know they prefer to receive electronic payments for all the benefits we’ve already discussed: getting paid sooner, avoiding manual tasks, and increased fraud detection.
But the construction industry is, as I mentioned earlier, a late adopter when it comes to technology. Contractors are a close-knit group and they learn a lot from what others are doing. Once something catches traction, adoption ramps up pretty quickly. Electronic payments can be dedicated to a specific vendor for a specific amount. Once that amount is paid, the virtual credit card (VCC) number goes away and can’t be used again. The notion of giving someone credit card information goes away too.