eInvoicing in New Zealand’s Construction Sector to Boost Confidence Among Subcontractors - Link4 eInvoicing

The construction industry, a $12 trillion global giant, is heavily reliant on subcontractors who form the backbone of most projects. Yet, these subcontractors often face delays in payments due to a lot of factors which includes the industry’s slow adoption of technologies. This situation has strained relationships, escalated project costs, and eroded subcontractors’ confidence. Nevertheless, with the increasing adoption of eInvoicing across the construction ecosystem, there’s a significant opportunity to transform this construction sector.

Faster Payments, Stronger Cash Flow

One of the most significant challenges facing New Zealand’s construction industry is the lengthy payment cycles. Subcontractors, who make up the majority of the construction ecosystem, often wait an average of 74 days to receive payment, with some waiting as long as 120 days. These delays have a ripple effect throughout the supply chain, forcing companies to dip into personal savings and increase bids to compensate for late payments.

eInvoicing offers a solution to these payment delays by enabling seamless invoice delivery. When a contractor or subcontractor creates an invoice, the process remains the same. However, the real advantage lies in the delivery: the invoice is sent and received almost instantaneously into the accounting system, significantly reducing the waiting period. This faster payment process not only improves cash flow for subcontractors but also strengthens relationships with suppliers, ensuring that materials are delivered on time and projects stay on schedule.

Reducing Administrative Costs and Increasing Efficiency

The construction industry is known for its complicated and time-consuming paperwork. Tasks like manual data entry and creating documents to prove that payments have often been made require a substantial amount of staff time and resources. According to a pilot program involving two dozen general contractors, using automated solutions, including eInvoicing, could save companies up to $90,000 per year in staff time and another $18,000 per year on software used to generate these payment proof documents.

eInvoicing simplifies these processes by automating the delivery and tracking of invoices, reducing the need for manual work. This not only cuts down on administrative costs but also minimises the risk of errors that can lead to payment delays or disputes. With a more streamlined invoicing process, construction companies can allocate their resources more effectively, focusing on project delivery rather than paperwork.

Enhancing Supplier Relationships

In the construction industry, the timely delivery of materials is critical to the success of a project. However, when payments are delayed, suppliers may hesitate to deliver materials on time, leading to project delays and increased costs. eInvoicing addresses this issue by ensuring that payments are processed and transparent, giving suppliers the confidence they need to deliver materials promptly.

Moreover, 9 out of 10 subcontractors say, they are willing to offer discounts of up to 5% in exchange for guaranteed payment within three days. eInvoicing can also result in cost savings for construction companies. By fostering stronger relationships with suppliers, construction companies can negotiate better terms and ensure that their projects are completed on time and within budget.

Driving Innovation and Competitiveness

As demand for innovative projects grow and the shortage of skilled labour continues to challenge the industry, there is an increasing need for construction companies to embrace solutions like eInvoicing.

By adopting eInvoicing, construction companies can position themselves as tech-savvy leaders, attracting top talent and securing more high-profile projects. Moreover, as eInvoicing becomes the standard in the industry, those who fail to adopt it risk falling behind their competitors. In a sector where margins are often tight, the ability to streamline processes and improve cash flow can make the difference between success and failure.

Securing Government Contracts through Compliance

Government contracts are a vital source of revenue in the construction industry, but securing these contracts requires strict compliance with payment regulations. Contractors who adopt eInvoicing not only streamline their payment processes but also build stronger relationships with subcontractors by ensuring they are paid on time. This reliable payment process is crucial for meeting the stringent requirements of government projects.

As government agencies increasingly adopt eInvoicing, they value its transparency, ability to reduce fraud, and ensure timely payments. For contractors, this means that adopting eInvoicing can help them comply with government standards, making them more attractive candidates for these lucrative contracts. By demonstrating their commitment to timely and transparent payments, contractors can gain a competitive edge, secure more government contracts, and support the confidence and stability of their subcontractors.For those in the industry, the message is clear; eInvoicing is not just a trend but a necessity. Find out how you can benefit from using eInvoicing by booking a discussion with us now: https://link4.co/nz