Last week I was reading an article in Building Design & Construction Magazine and it resonated in a big way with what we are working to achieve here at Digibuild.
The article was titled “Top 5 Cash Flow Tips for Construction Companies”.
Who wouldn’t want to improve that area of their business, right?
One key point of the article was this:
According to a survey conducted by the Electrical Contractors’ Association (ECA) and the Building Engineering Services Association (BESA), 66% of construction companies said they faced frequent late payments. As a result, 59% of business owners had to stop paying themselves or had to reduce their salary.
Here are the five tips that article presented as solutions.
- Negotiate trade terms with suppliers
- Regular cash flow forecasting
- Use credit wisely
- Use faster payment collection methods
- Keep on top of late payments
Like virtually every other construction company, my own construction business experience has run into one or more of these challenges at some point. Cashflow, payments, and collections are three of the major driving factors that led me to create DigiBuild.
Tips 1 and 3: Negotiate trade terms with suppliers and use credit wisely
When negotiating terms and making credit decisions, knowledge and information is power. DigiBuild will have built in features to provide data that can be used to make purchasing decisions as well as speed up and improve the credit application process.
We are building in a new level of transparency and trust.
Tips 4 and 5: Faster payment collection methods and staying on top of late payments
Reducing late payments and collections most often comes to data and proof. With DigiBuild’s Guaranteed Truth Timeline, all of the transactions will be safe and secure in an unbreakable path.
We’re also building a payments system that will utilize BIM, VR scans, budgets/cost codes, and a new technology called smart contracts that can automate the entire payment process. Job costs will be loaded into a BIM model, a VR scan then detects the progress made in the field (ie. scans a section for completion %), and then computer code executes to release the proper amount of $$$ based on the exact amount of work complete. Payments will happen faster and more automatically than ever possible. Think about how Netflix allows you to “stream” movies at any time; now apply this same methodology to your payments and we are looking at a product that will change cash flow in the industry forever.