It isn’t often that the construction industry leads in new technology adoption, yet that is the opportunity offered by a new partnership between Viewpoint, a leading construction software provider, and Nvoicepay, a B2B payments automation company. Full disclosure: I recently joined Nvoicepay because I knew that integrating their payments automation technology to Viewpoint’s system was the solution a lot of construction companies have been wanting. This is a relatively new technology category and early adopters can use it to gain a significant competitive advantage.
It’s been a long time coming.
I’ve been selling software and services to the construction industry for about 25 years, both to residential and commercial builders. My first exposure to the payments process was in 2000 when I went to work for a company that was trying to build an e-commerce hub—what today you’d call a marketplace or platform—for home builders, manufacturers, and suppliers.
We got a quarter of a billion dollars in venture money and flamed out after 2 years, for a few reasons. Looking back, it was just way too early. These kinds of three-way marketplaces are everywhere now, but it took cloud technology and massive increases in computing power to be able to build them at scale.
Even if we had had the technology, I don’t think that the home building industry, save for a few of the national publicly traded builders were big enough and sophisticated enough that it would have made sense to them to invest in something like that at the time. There were a lot of manual processes, and almost all payments were made by check, but construction companies tend to invest more in equipment than technology. It would have been a hard sell.
MOVING THE NEEDLE
I went back to selling construction software but got back into the payments side in 2009 when I went to work for a company selling Mastercard into ERPs for commercial construction.
Banks were selling similar card programs, but what my company at the time did well was hire people, like me, that knew the industry and could understand how integration would work with their ERP system. We could also look at a contractor’s vendor master and be able to identify vendors that we knew would take a card, so we could quickly calculate the rebates they would get based on their spending with those vendors.
We understood the pain points better, and so we were able to connect and make the business case for card payments in a different way that banks were doing. We did an excellent job of exposing a lot of construction companies to the idea that they didn’t have to pay everyone by check.
SEEING THE BIGGER PICTURE
I wanted to broaden my exposure to more industry verticals, and to more global electronic payment technologies, so I next took a job with Visa to work with banks on electronic payment strategies. What I saw was a lot of complexity. Smaller banks were either looking to adopt an electronic payment solution for the first time or upgrade their existing offering to a more modern platform.
Many of the big banks were managing multiple payment solutions to target mid-market and enterprise segments. Some were EDI-based; some were tied to treasury management solutions; some of them were based around corporate cards, some around ACH. Banks had invested a lot of time and money building in-house payment platforms, and it seemed that many were at a crossroads, trying to determine whether they should continue to put resources toward these platforms or adopt a third-party solution.
One thing that became very clear to me was that electronic payment solutions were evolving quickly, and fintech firms, not banks, were on the leading edge. Visa, like Mastercard, was and is proactively partnering with these fintechs to enable virtual cards as a payment option in their solutions.
Eventually I made my way to Nvoicepay where I’m helping launch and grow their new Viewpoint partnership. I heard about how they were innovating the construction industry through supplier payment automation and I knew this was something I wanted to be a part of.
THE TIME IS NOW
The construction industry has come a long way regarding accepting electronic payments, and it’s cool to have been part of that trajectory. In this industry, getting an invoice approved for payment is much more complex than in other industries. You don’t just have people in the back office who have to approve payments. You have construction managers out in the field who have to confirm what percentage of the work has been completed, which will dictate they payment amount. There’s a lot of communication that has to happen, and a lot of room for error.
Construction companies are starting to realize that the AP department should be spending its time making sure that they’re paying the right invoices in the right amount at the right time. The last mile, the printing of the check, the stuffing of the envelope, or the assembling of files for ACH and card payments and keeping track of who gets paid how is a low-value activity.
If that whole piece can be outsourced to one company that can maximize card payments and rebates, set up ACH for vendors that won’t take cards, and issue checks for those holdouts who still want paper, that’s a tremendous value proposition.
We were trying for that way back in 2000; we made headway in card payment acceptance over the next decade or so. Now with the evolution of technologies like optical character recognition that can digitize paper invoices, and workflow software that can move invoices through the approval process, the front end has pretty much been automated. That cleared the way for a company like Nvoicepay to come along and automate executing the payment—not just card payments, or ACH payments, but any type of payment. When I saw that, I thought, “if you can’t beat ‘em, join ‘em.”
ABOUT THE AUTHOR
Jason Krankota is vice president of construction sales for Nvoicepay. For more information, visit www.nvoicepay.com.
Modern Contractor Solutions, July 2018
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