With the start of a new year, it is a convenient time to take a look at some of the financial trends that influenced the construction industry over the last year and will likely continue to do so in 2020.
Here’s a quick overview of some of these major construction accounting and finance trends you should be aware of as they continue to be influential in your industry.
Online lenders entering the industry
Online lending has really taken off in a variety of sectors over the last few years, and it has started to become a big factor in the construction industry. There are a variety of construction lending groups that are increasingly targeting the building and construction niches for their products, and paying attention to the smaller builders who actually make up the majority of the industry.
It is important for owners of construction companies to give online lenders just as much consideration as they do traditional lenders.
Better payment management for contractors
There has been an increased focus on leveraging new technologies and software to make payment management easier than ever for contractors, which also helps these contractors to maintain better ongoing working relationships with their subs.
Better payment processes often means faster payouts for subcontractors, who often are the last to see their money in construction projects. Subcontractors get improved cash flow and business health, making them more likely to want to continue the working relationship with the contractor on future projects.
Better management of loan payouts to builders
In addition to improved payment management for contractors, there are also ongoing movements to improve payment management for the banks managing construction loans. The idea is to create better management of the process to allow for better partnerships between lenders, owners, general contractors, subcontractors and materials suppliers. Better management means greater transparency and confidence throughout the entire payment process.
Implementation of BlockChain technology
BlockChain technology is exploding in usage in a variety of business sectors, and we’re starting to see it become a major factor in the world of contractor payments. It allows bills to be developed and verified in an automated fashion, It allows for greater automation of payment and validation of job completion. BlockChain has expanded its versatility greatly over the last five years or so, and its usefulness in the world of managing payments and billing can’t be understated.
These are just a few examples of some of the most prevalent trends in the world of construction accounting and finance. For more information about trends you should keep abreast of in the coming year, contact us today at Patin and Associates.