Late or missed payments can be detrimental to projects and, in some cases, can even force organisations to close their doors, as seen in the case of Mechanical & Electrical (M&E) services specialist Star Services (Southern) in 2019.
So, what is the missing piece of the payment puzzle for organisations in the M&E space? In this blog we take a look at how - and why - Payapps is steadily placing itself as the software of choice for many organisations, with 25% of the top 30 M&E contractors now using this online solution to manage their supply chain applications for payment, valuations and document compliance.
The mechanical & electrical sector
Any fast-paced industry typically comes with aggressive timescales. As such, the speed at which the M&E sector can move means that streamlining subcontractor applications for payment is a key consideration for those working in the space.
Traditionally, payment processes were managed using emails and spreadsheets, leaving contractors open to missed deadlines, increased risk, and a lack of cash flow visibility.
By switching to software such as Payapps, M&E companies have started to shift towards amore modern method of construction administration. Digitising their application for payment and certification process opens the door to improved collaboration and transparency throughout the supply chain. Additionally, they can also benefit from compliance with the UK Construction Act / Construction Contracts Act.
Payapps and the M&E industry
Often 20% of a project is made up of M&E work, so it's a significant part of any construction project. A typical M&E contractor might be processing 120 -160 applications for payments per month, with those at larger firms dealing with around 300 - 400 per month.
Trying to value such a sheer amount of applications and accurately and pay the supply chain on time can lead to a significant strain for commercial teams. Discussing the challenges they face, we spoke with UK&I Head of Payapps, Neal Hooks.
"The sheer volume of applications and the pace of the industry means that there is a very real process challenge. Often a surveyor, who would be responsible for valuing subcontractor applications, and could also be managing multiple projects with various different subcontractors - means manual processes can very quickly become unwieldy, leading to a loss of visibility.
"In my opinion, M&E contractors also seem to have a different mindset. The nature of their work means that they are more open to innovation and to adopting new technology."
Cilantro Engineering - Payapps in practice
As established earlier, several top M&E contractors have already started to turn to Payapps to futureproof their processes. In a recent case study, we took a look at Cilantro Engineering, which is just one of many organisations to benefit from our software.
Cilantro implemented the Payapps platform to automate its subcontractor payment process, meaning all payment applications are received in a consistent format with all required supporting information, whilst data such as payment date or previously paid are self-calculating and remove the risk of human error.
Cilantro's Commercial Director, Sean Hickey, explained how this newfound consistency in application and payment notice format has not only reduced risk but has saved them significant time. Discussing the benefits, he said, “We no longer spend time scanning in payment notices and sending them to subcontractors or accounts."
The business benefits continue, as Payapps also helps Cilantro reduce the risk associated with subcontractor compliance. Payapps makes it easy to track critical subcontractor information, like up to date insurance helping all parties understand and get notified if anything is soon to expire or missing. "Whilst remaining a relatively small part of the process, this still saves Cilantro hours a month," Sean concluded.
The Benefits of Payapps for M&E contractors
Typically, M&Es using Payapps will see ROI within a short timeframe through a structured process, but the benefits don't end there. Users of the software also listed better decision making, improved visibility, a better understanding of risks and liabilities, time-saving through automated processes using consistent formats and digital approvals.
"Variation management is a key differentiator for Payapps," said Neal Hooks. He continued, "Due to the short lead in time to get on-site, variations are commonplace in the industry as elements become clearer when work starts.
"Payapps provides real-time visibility of all subcontractor variations, making all liabilities known. In addition, an M&E contractor can use Payapps to analyse a subcontractor working on multiple schemes and understand their status across all projects in one report, which includes their forecast projected final accounts for variations."
M&E contractors are often dealing with multiple applications for payment at any onetime. Typically, these applications come in several different and inconsistent formats, creating process overhead for the M&E contractor. But, it no longer has to be complex or cause headaches.
M&E contractors have shown signs of standardising processes throughout the supply chain, suggesting improvements to their working practices are already underway.
Join the growing number of M&E contractors who are already using Payapps by arranging a free demo with one of our consultants to see how we can:
- Save time through automated processes and standardisation.
- Provide a better understanding of risks.
- Offer insight into cash flow forecasting and the visibility of liabilities.
- Improve visibility across both the supply chain and ongoing projects.