Government incentives are spurring nationwide industry investment as manufacturers race to find space to fulfill demand.
As first reported last week (April 8) by the Wall Street Journal, the industrial real estate market is booming, as manufacturing-related construction reached a dizzying $108 billion last year. New factories are reaching completion nationwide as billions in government incentives encourage manufacturers to bring production stateside.
An uptick in industrial construction has occurred alongside this manufacturing boom because factories must either be custom-built or retrofitted to meet manufacturers’ production needs. This is a relief to the industry, which has been threatened in recent years by the collapse of commercial real estate.
However, the real estate development sector still has a long way to go when it comes to more modernized processes that can compete in today’s highly competitive market. This reliance on legacy systems, in this case paying with paper checks, is evidenced in PYMNTS’ collaboration with The Clearing House, “Corporate Changes in B2B Payment Practices: The Future of Real-Time Payments in Real Estate.”
Although checks are the sector’s top B2B payment method for sending and receiving, the legacy option’s reign may finally be coming to an end. A significant increase in late payments for wages and invoices, leading to a project pause or halt, has spurred contractors to modernize their payments processes. Delayed invoice remittance is part of the reason 34% of construction firms are now focused on updating their payment acceptance process. Another 32% are modernizing their invoice delivery platforms.
Fortunately, for contractors and construction firms looking to modernize, third-party providers are available to facilitate the transition. For example, FinTech Handle recently added Fiserv’s embedded payments capabilities to its construction-specific offerings. With the integration of these capabilities, Handle’s software — aimed at material suppliers and specialty contractors — will include secure payment acceptance.
Demonstrating different facets of systems modernization these third parties might provide, Built Technologies launched a unit focusing on solutions for commercial property developers earlier this year. The purpose-built platform currently in creation will address funding delays, manual processes and unexpected change orders, among other market challenges, per the firm. Additionally, supply chain software firm SubBase introduced a tool solely focused on invoice reconciliation. Solving issues stemming from manual reconciliation, the tool automatically sends all invoices to the platform, pairing documents with purchase orders and delivery tickets and creating a log allowing customers to track invoices in real time.
With government incentives spurring on this manufacturer-focused construction, contractors hoping to get in on this growth may consider modernizing their systems. To be competitive with the sector’s larger players, this could be necessary — or risk getting left behind in the (saw)dust.