Streamlining Your Construction Billing Process

Streamlining Your Construction Billing Process

Profitable construction businesses need to organize and streamline their billing process, so team members know what to do, and when and how to do it. Administrative teams become frustrated and discouraged when processes are out of sync or require a lot of work around.

Luckily, creating a billing process isn’t rocket science.With a few simple actions, you can pull the team together and get those billings done.

Bill At The Same Time Each Month

When setting up your billing process, establish a date range for when your billings will be processed and completed each month. For example let’s say, the 20th through the 25th. By setting aside specific days each month for billing, you’re showing your team that it is an important task, and they should prioritize it.

Check the calendar monthly and note the specific dates assigned for billings and this time aside just for billing. Start with two to three days, depending on the volume of work you have going on. Once you have experience and know how long the process takes, you can tighten the schedule accordingly.

Use Billing Software

Creating invoices manually, either handwritten or on a computer, can cause errors. You may end up with duplicate invoice numbers, matherrors, unsaved invoices, and unsent invoices when tracking invoices by hand.

It’s best to use invoicing software that’s specific to the construction industry. Change orders and retention aren’t included in most retail billing programs. By using a construction-specific program, you’ll save yourself time and energy.

If you rely on subcontractors or suppliers to bill you so you can bill your client, a streamlined invoicing and payment software, like MX Build,can help. It makes collecting invoices and making payments easy and simple. And the information is transferred directly to your budget, so you know where you stand at any moment.

Use Your Software’s Billing Process

Most software programs have a procedure for creating invoices. The workflow includes the reports and other data you’ll need to review before invoicing, as well as the steps it takes to create and send an invoice.

You’ll want your own billing process to parallel the workflow from your software. Setting up a process that’s the opposite of how your billing software wants you to do it, won’t be productive. Taylor billing process to include the steps that the software recommends, plus additional documentation or reports for your own records.

Use Budget Reports

Before deciding which jobs to bill each month, consider running a budget report summary on each of your active jobs. Looking at these reports gives insight on which projects had costs, and if they need to be billed or not.

When it comes to deciding how much to bill, it depends on the type of contract you are working under. For a cost-plus invoice you bill the costs you’ve incurred plus your mark-up per the contract. For a percent-complete contract you bill the percentage of the contract that is complete. Your invoice should cover your costs, overhead expenses, and profit.

Assign Tasks To The Appropriate Team Member

Once you know the process to complete your billings, you can start splitting the process up to make it more streamlined. Project managers could review costs and bill their own projects. The payroll department could be responsible for creating certified payroll reports. Accounts payable couldtrack lien releases as they come in. Determine the best position for each task.

With billing software, you may have opportunities to automate some of the tasks in the process. These tasks might include gathering and paying invoices, exchanging lien waivers, or sending invoices via email, then use those opportunities. Automation means less work, reduces human error, and will help speed up the billing process.

Diagram Or Outline The Process

Once you’ve got the process outlined and written down, including the names and positions of who does each task, it’s a good idea to write it out or even diagram it. Some people are visual learners and seeing a diagram of the process may help them understand it.

Be sure to include how to correct errors or what to do when a discrepancy is found. Preparing for these kinds of things and having a process in place ahead of time makes them easier to handle when the time comes.

Now You’re Done

Setting up a billing process isn’t difficult. Start with the process your billing software requires, automate as many as possible, then add your own steps. Make sure everyone knows what they are responsible for and their deadlines. Reassess the process every few months to make sure it’s still working and is still the most efficient way to complete your billings. If you do this, you’ll have a construction billing process that ensures you’ll have a steady stream of income.