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In construction, planning is everything. It’s one of the few sectors of the economy where billing is incredibly fluid and dependent on your initial bid estimates. Project profit is a product of cash flow management and accurate cost projections. Many businesses won’t even know whether or not a project was truly profitable until long after it’s been completed. All of this results in an industry where the margin of error on your revenue forecasts translates directly into either profit gain or fade in your billing.
This situation presents a serious challenge to construction finance teams. Despite the importance of accurate projections, many businesses can’t afford to spend the resources needed to get that perfect project forecast. These forecasts require your team to spend hours upon hours on double data entry into spreadsheets, and even more time validating those estimates to ensure there are no errors. It forces teams to prioritize certain forecasts and causes industry leaders to rely on guesstimates and gut instincts for key business decisions. After all, why spend precious resources projecting bids that may not even happen?
This is where financial automation can help your teams unlock key business insights. A financial automation platform can aggregate your financial data from all of your systems to generate custom forecasts. It lifts the burden of reporting off of your shoulders and supports your teams with accurate, timely projections and billing estimates. Let’s explore how financial automation can help construction companies plan for every scenario, analyze business trends, and achieve a rolling forecast.
Analyze your financial trends
Construction companies are always asking themselves how they can perform better on projects. In some cases, the answer can be rather vague and general. However, the key to enhancing business performance is to use in-depth, quantifiable metrics that you can track throughout a project. By tracking these numbers, you can understand where your business is headed and whether or not you’ve achieved the goals you’ve set for a project.
A financial automation platform can help your business supercharge its performance analysis. Platforms like Briq can comb through all of your historical project data to locate recurring trends and highlight them for your business. Whether it’s an expensive supplier of materials or rising equipment costs due to scheduling errors, trend analysis can highlight where most of your profit fade is occurring and what areas you can improve for better business results. It’s an automated stream of real-time insights made to help you enhance project performance and select the perfect bids for your business.
Invest in rolling forecasts
A great forecast makes all the difference in a construction project. An accurate picture of costs, revenue, equipment, and labor sets your company up for success and allows for billing that expands your profit margins. It sets up a realistic roadmap for your company to work with when executing projects. Despite the benefits, these forecasts can take a great deal of time and effort to complete. Not only do your accountants have to create these spreadsheets manually, but they also spend a great deal of time and effort requesting documentation and data from the operations department to get them done. At best, this slows down the speed at which you’re getting your forecast. At worst, it can cause errors to pile up, reduce the accuracy of the forecast, and even prevent it from being created altogether.
Companies need to start leveraging financial automation powered by data analytics to create their forecasts. These automation tools can accurately forecast everything from labor to equipment costs with the right data on hand. These forecasts are generated instantly and can be run again at any point during the project. Best of all, these tools connect to your systems and stay updated on all of your financial data as it changes. Your company won’t be anchored to a forecast that was created months ago with incomplete information. Instead, your team can stay equipped with real-time projections that present your financials as they are today, not how they were yesterday.
Test for every scenario
Scenario planning is one of the most challenging and valuable financial exercises a construction company can undertake. Instead of projecting a single path ahead, it allows you to explore multiple routes and plan key business decisions to accommodate all possibilities. However, every scenario you plan for creates a cascade of data entry tasks for your financial teams. Each hypothetical revenue forecast means hours spent copying over data from your CRM, ensuring formulas are correct and validating data for your forecasts. It’s no surprise that some companies forego this process entirely, and choose to lean on experience and gut instinct when taking on bids instead.
While experience is an effective asset for business, it doesn’t have to be your only one. By merging data-driven insights with years of experience, you can create the best outcomes for your business. Financial automation enables you to do this by offering fully automated scenario testing. A platform like Briq provides specialized forecasting tools that can instantly include or exclude any data from a forecast in just a few clicks. On top of that, our automation can extract the data you need from your CRM without any additional human input. Construction companies will be able to test for the best and worst-case scenarios on all project acquisitions. This allows you to make decisions that protect your company's bottom line while also maximizing profitable opportunities. It offers the best of both worlds without sacrificing time, accuracy, or manpower to generate a new forecast.
Plan with the right platform
Financial automation brings together all the tools and knowledge you’ll need to take your financial planning to the modern level. It enables construction executives and managers to consider many different scenarios and optimize all the resources at their disposal. It’s the solution of choice for businesses looking to reduce overhead costs, eliminate fee erosion and maximize total fee. That’s why we’ve created a platform built to bring these benefits to the industry as a whole.
Briq is a financial automation platform that combines the most modern technology available, and hundreds of years of construction experience into a single solution. Briq joins your financial and operational data into one platform, empowering you to make more informed decisions, faster. Contact us here to speak with our experts and see how Briq can help you improve your business.
