It’s no secret that today’s finance teams are working longer and harder — and are under more pressure to accomplish more in less time. They are tasked to deliver profitability against a backdrop of challenges that include a qualified worker shortage and an increase in the price of materials, labor, fuel, and machinery.

For a growing number of companies, the overarching challenge is to cut the time required to complete tedious manual tasks.

Enter automation. While automation isn’t new in accounting, the technological advancements in recent years have been significant.

Automating key accounting processes delivers a host of benefits including time and cost savings, less manual data entry, and reduced risk. This article takes a closer look at some of the technologies that enable automation in construction accounting and how automation impacts the industry.

The Rise of Artificial Intelligence & Machine Learning

Lately, it seems almost impossible to have a conversation about automation without mentioning artificial intelligence (AI) — and for good reason. Not only can AI eliminate mundane tasks, but it can also transform the rapid exchange and understanding of accounting and financial information.

While conversations about AI often focus on its limitations, vulnerabilities, and inaccuracies, it is important to understand the new advantages and benefits as finance departments start to harness AI to streamline tactical operations.

AI can already recognize and categorize financial data to automate accounts payable (A/P) processes to reduce errors and increase productivity. Some organizations using AI services state that solutions have helped to reduce invoice processing by 5-10 times, which has confined the entire process by 3-5 days.¹ Others are using AI to review the general ledger to identify anomalies and patterns in transactions that might escape human review and merit further investigation to prevent fraud and ensure strict compliance.

Machine learning, which is an application of AI, is also gaining in popularity in the industry. Some current technological solutions can flag general ledger outliers by combing through data and scoring transactions for the likelihood of an error or conflict. Being immediately alerted to any potential issues and correcting them as they come up helps ensure that financials are up to date.

AI & New Possibilities

The power of AI isn’t limited to its ability to improve efficiency and productivity for finance and accounting. While it excels at automating repetitive tasks and extracting insights from large volumes of data, it also offers the ability to understand patterns in historical data and predict future recurrences, thus allowing construction companies to identify opportunities and risks that may have otherwise gone unnoticed.

AI leads to strategic decision points faster and is unparalleled in its ability to perform research quickly and uncover compelling insights; however, AI is not a replacement for human experience and judgment. A company shouldn’t rely solely on AI to make strategic decisions.

For instance, asking an AI tool “Which of these development projects [provide options] will yield the largest possible return?” places too much trust in technology that’s still evolving. Instead, AI is a superb starting point. Humans still think outside the box and take advantage of novel circumstances — and AI can easily miss those opportunities.

Despite all the hype, it must be recognized that these are still the early days of the AI adoption cycle. Rapid and frequent improvements to the technology will address flaws and accelerate improvements with feedback loops that help AI models improve over time.

For now, it is important for construction companies to view AI, machine learning, and other emerging technologies as helpful tools. Instead of replacing human jobs, these technologies will create new possibilities. When AI-generated insights are combined with the expertise of finance professionals, they can lead to better decisions, performance, and, ultimately, outcomes.

Achieving the Continuous Close

A great example of using technology for better outcomes is the continuous close, which allows accounting departments to perform month-end closing processes throughout the month rather than saving them all for a frenetic month-end.

Construction companies need faster closes so that finance can move on from tactical and clerical tasks to higher-value, higher-impact strategic activities that can help the organization capitalize on opportunities, respond to threats, and create greater agility.

This approach captures data in real time, enables continuous reconciliations, and allows teams to adjust on the fly, ultimately providing a clear and accurate financial picture at any given time.

The Stubborn Seven-Day Close

For too many construction companies, the period closing is a stamina-draining exercise in painstaking clerical repetition. And it’s not just a challenge in the construction industry.

In Sage’s annual “Close the Books” study,² research found that the average organization requires seven working days to close its books — a figure that has largely held steady for the past few years. The close often involves many manual processes as teams pull data from enterprise applications, test-audit and trial-close accounts, scrutinize the general ledger for errors and anomalies, make journal entries, perform bank reconciliations, and spend nights and weekends trying to get it done as quickly as possible.

Automation can play a critical role in accelerating the closing process. Research confirms that when companies deploy automated solutions, the time to close the books shrinks significantly.³ By reducing or eliminating time-consuming manual processes — error-prone spreadsheets, countless email exchanges, overmatched single-user accounting systems, and other headaches — a continuous close enables more time to be devoted to strategic finance rather than tactical finance, which translates directly into greater value.