30% of Construction Firms Are Investing in Technology

Construction firms are looking to technology to help them improve operations and build resilience.

Thirty percent of such firms said they are preparing for a possible recession by investing in technology to save time and costs, according to the January/February edition of the “B2B and Digital Payments Tracker®,” a PYMNTS and American Express collaboration.

They’re planning to add technology to accelerate payments, reduce financing costs and streamline back-office processes — solutions that address common problems in the construction industry, according to the report.

Technology is meeting many challenges and driving improvements in several different aspects of the construction industry.

Speeding Up Payments and Billing

For one, it’s speeding up payments. Patricia Bonilla, owner and president of Miami-based Lunacon Construction Group, told PYMNTS that issues around payments are ever-present in the industry and that she has learned to make receiving payments a priority for the company.

Among other solutions, such as targeting clients who have a history of paying vendors, she is motivated to use digital tools to relieve the pain of late payments.

“We are focused on innovation and [getting] more work,” Bonilla said when interviewed for the report.

Back-office processes are also being improved by tech. For example, construction billing platform Siteline raised $15 million in Series A funding in February 2022 for its solution that lets trade contractors compile accurate payment applications, manage compliance documents and keep track of payment status — enabling them to accelerate their internal billing processes up to six times faster.

“Getting paid in construction is a huge hassle, and that makes cash flow harder to manage,” Siteline Co-Founder and CEO Gloria Lin said at the time.

Easing Access to Equipment and Materials

Technology is helping contractors get the equipment they need to do the job. Kevin Forestell, CEO and co-founder of construction equipment rental marketplace DOZR, told PYMNTS’ Karen Webster in September 2022 that B2B buy now, pay later (BNPL) is the solution here.

The extended terms help these firms overcome the gap between the time they must pay for their equipment rentals, which is generally within 30 days, and the time when they get paid for the work they did, which is often 30 days or 60 days later — with as much as 40% held back until the job is completed, Forestell said.

FinTech solutions help construction firms get the materials they need, too. In one solution, Billd and Procore partnered in September 2021 to quadruple the pay-back time on supplies to 120 days — solving the problem contractors face when they must pay suppliers for materials within 30 days but don’t get paid for their own work for an average of 85 days.

“This has always been a dysfunctional part of construction that the subcontractor takes the brunt of,” Billd CEO Chris Doyle told PYMNTS at the time.

Managing Risk and Cash Flow

As construction firms prepare to weather the challenges of 2023, the “B2B and Digital Payments Tracker®” suggested that they use banking providers that enable faster payments, replace legacy systems, prioritize vendors with digital maturity, and identify and implement digital solutions that will drive stronger cash flow.

Companies that have made these changes have seen results. For example, the report found that 79% of construction companies said accepting electronic payments helped them get paid faster.

“We’re in the business of building, but we’re really in the business of managing risk and managing cash flow,” Bonilla said in the report.