B2B Payments

Redesigning Accounts Receivable For Architecture And Engineering

The architecture and engineering (A&E) supply chain is a complex web of designers, builders, contractors and sub-contractors, project owners and more. With multiple business models available to initiate and complete a project, the flow of cash from one participant to the next is often bottlenecked as a result of procedural inefficiencies and a lack of digitization.

For A&E firms, the concept of a centralized port of back-office data in the form of an enterprise resource planning (ERP) system is a valuable proposition to help ease some of this complexity and strengthen B2B relationships. But the unique intricacies of the sector mean the average ERP solution can't always suit the industry's needs – especially when it comes to B2B payments.

With the ERP as a source of consolidated financial information, Unanet Chief Product Officer Assad Jarrahian says it's also an opportune platform to initiate a variety of other financial processes, including accounts receivable (AR). But it's essential that A&E firms adopt ERP solutions that can suit specific demands.

"A&E has very specific nomenclature around running back-office systems," he told PYMNTS in a recent interview, adding that other unique characteristics include "how projects are contracted out, how they are executed and how they are billed."

Redesigning Accounts Receivable

To support A&E firms' efforts to reduce back-office complexity, Jarrahian said it can be particularly valuable for ERP solutions to integrate AR and other B2B payment and procurement functionality, rather than leaving companies to adopt separate third-party platforms that would need additional work to integrate with the ERP.

But just as an ERP system must support the nuances of the A&E market, so must any integrated AR functionality.

Jarrahian pointed to the industry's tendency to have high-value invoices as one major challenge. Unanet recently announced upgrades to its own A&E-targeted ERP solution, Clearview, to enable users to generate invoices and track when customers open and view those bills, while also automating payment reminders.

"What we learned through our own customer base is that customers using other ERP solutions took up to 50 hours a month just keeping track of accounts receivable forms," he said. "Getting ready to send the invoice, actually sending it out via snail mail or sending it out yourself digitally, keeping track of whether your customer actually opened that email."

With so many parties involved in a single project, streamlining the invoice process is an important part of nixing complexity.

What's also key, added Jarrahian, is incorporating payments functionality within the AR process to reduce as much friction as possible for the payers. Traditional ERP solutions tend to support credit card payment acceptance, he said, but in A&E, invoice values can often exceed $10,000, making card payments non-viable for the payer or too expensive for the recipient.

"Our customer base is sensitive to credit cards for invoice payments," he said, adding that Clearview's support of ACH, as well as cards, enables A&E firms to embrace electronic B2B payments at a friendlier price point.

A Solid Financial Data Foundation

To facilitate ACH payment acceptance, Unanet struck a partnership with both Stripe and Plaid, two service providers that Jarrahian said allow A&E firms to establish payment capabilities within only a few minutes.

But as Clearview functionality expands, Jarrahian said Unanet will continue to look at value-added opportunities in promoting financial data integration and analytics. Integrated bank account data means streamlined ACH capability, while integrating AR within the ERP means efficient financial processes. Expanding out, data integration is also essential to supporting enhanced accounts payable (AP) processes and broader cash management strategies, too.

"In today's day and age, especially with this macroeconomic situation, it's imperative that cash flow is the central focus point," he said. "Integrated AR allows the customer to reconcile much quicker, thereby giving them more headroom in taking care of addressing accounts payable concerns."

Enabling organizations to obtain the data they need at the moment they need it will be essential to ensuring that A&E firms can optimize coordination with project owners, subcontractors and everyone in between, as well as optimize the flow of cash in and out of the enterprise. With that in mind, enterprise resource planning platforms can be a valuable asset in consolidating and making use of that data – both on the accounts payable and accounts receivable sides – so long as ERP systems can address the nuances of the A&E market.

"We are looking at this from the perspective at-large of, how do we innovate to reduce friction, whether in today's economic environment or a different environment?" said Jarrahian. For Unanet, that means introducing support for ACH payments, integrating invoice delivery and enabling users to access the ERP solution via web or mobile device to support work-from-home professionals.

Easing friction will continue to drive the ERP's evolution in this space, he noted. "It allows our customers to prepare for the challenges of today, and continue to capitalize on the opportunities of tomorrow."

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