Four Reasons Why a Contractor Management Software Can Help You in Financially Difficult Times

It may seem counterintuitive to rush out and purchase software in financially challenging times. However, investing in the right software solutions during all these challenges can be a strategic move that yields long-term benefits for businesses. By leveraging technology to optimize processes, improve management, and stay competitive in a rapidly evolving market, businesses can position themselves for growth and resilience, even in uncertain times.

 

Complex external labor, services, equipment, and materials are core components of an asset-intensive company, and with these areas often comes a considerable amount of hidden spend. This is where a Contractor Management Solution (CMS) can provide a great deal of benefits in the effort to reduce spending and gain control over expenses.

 

Purchasing this type of software can help rack up savings with time, expense, and payment management.

·       Time and expense management,

·       Unit rate and skill catalogs,     

·       Equipment and materials, and

·       Payment management.

This blog post will explore how these four areas can lead to savings using a Contractor Management Solution.

 

Time & Expense Management

With a contractor management solution, time logging and expense management is the most significant area in which savings can be realized. Average efficiency savings in this one area can range between 8-12%.

 

 

How does the software help:

1.     Digital Schedules:

The technology allows them to upload bulk timesheets and manage their hours against a digital schedule. The digital schedule can provide guardrails for entry errors by automatically applying scheduled hours to a timecard, which reduces entry time to only the exceptions – overtime, exceptional circumstances such as a turnaround skill code change, weekend hours, etc.

 

2.    Exception management:

Improvements can come from digital time exception management pre-linked to the correct billing rates, thus saving time to search for each exception rule and its linked charges manually.

Time and pay differentials between different types of labour can be incredibly costly to manage manually. Having a solution that automatically applies the correct rates and time exceptions can significantly reduce processing times.

 

3.    Review and Approvals:

A Contractor Management Solution can allow bulk reviews and approvals for timecards while separating the timecards with exceptions, time adjustments, and other exceptional circumstances to be flagged and reviewed individually.

This format streamlines approvals and prevents manually skimming through dozens of timecards, thus reducing the potential for timecard approval errors. Reduced errors in entry and approval also save time on the backend in having to submit credit/debit memos for pay corrections while allowing payments to be made quickly for accurate timecards.

Unit rates and skill-based catalogs

Contractor Management Solutions can provide anywhere from 4.5-8% in negotiated and managed cost savings using digitalized unit rates and skill-based catalogs.

Catalogs can also speed up quotation processes by allowing known suppliers to submit pre-negotiated rates on equipment rentals, materials, services, and labour alongside the newly quoted prices for a package deal.

If you are a Sourcing or Procurement department team member or work closely with them, you would know that cost savings can be achieved using a supplier’s historical catalog data.

Some questions you might ask would be:

• How often has the supplier been used?
• What services, rental equipment, materials, and labour has the supplier provided?
• What is the cost?
• How many quotations have the supplier submitted that have turned into catalog prices?

How does the software help:

Since the Contractor Management Solution digitally compares quotations from other suppliers, accessing these answers can provide compelling insights.

Solutions like NHD’s AES/32 will allow suppliers to submit discounts against quotations for good bidding and cost avoidance. It also allows catalogs to be set up for each supplier and rate type to automatically apply approvals for catalog items submitted in the billing.

This also gives Procurement managers critical visibility into what is being purchased, how often it is being purchased, and how often the catalog purchases are submitted with rate exceptions.

It avoids wastage of time during negotiations and further empowers Procurement to negotiate discounts for the surprising usage of catalog items that might not have been on their radar in previous negotiations.

Streamline Operations Equipment

Rentals and material purchases are the third central area in which savings can be achieved, totaling a potential for a 2-4% reduction in spending through cost avoidance measures. Equipment rentals and subsequent material purchases can account for a tremendous amount of rogue spending if the proper visibility and management controls are not in place.

Heavy equipment such as excavators, bulldozers, and scaffolding can be purchased for a project that ends up being extended to other locations or timeframes, which can be easy to keep track of on a small scale. However, large enterprise companies have multiple projects with these items, leading to several instances of renting equipment that is now sitting around accruing charges.

 

How does the software help:

Contractor Management Solutions like NHD’s AES/32, with its scaffolding management feature, can provide the necessary visibility into what is being rented and the duration, and specialized solutions can even provide insights into where all the equipment is physically sitting so that unnecessary rentals and materials are not overlooked.

AES/32 can track scaffolding locations, cost, and spending on a digital map, allowing project managers to see equipment sitting for an extended period.

Payment Management

The final area where 0.5-1% cost avoidance can be achieved is through the Contractor Management Solution. Sourcing, Procurement, and Maintenance departments can easily be bogged down by suppliers asking their company contacts to track down where their payments are in processing.

How does the software help:

Contractor Management Solutions allow suppliers full transparency in real-time. If done manually, it can take a considerable chunk of time, depending on the number of approvals in the payment process.

The AES/32 allows a ‘One-Click’ payment processing solution. The One-Click solution allows suppliers to set up and submit billing against a lump sum or milestone amount in as little as one click. Suppliers love this feature as it reduces administration costs for their billing departments, and buyers love this feature for the simplified billing and payment processes, which can also be managed in an automated way.

We know the primary areas where Contractor Management Solutions can equate to savings through streamlined processes, visibility and negotiation power, and cost avoidance, totaling between .5-25%.

Companies strapped for cash can cash in on enormous benefits by purchasing a Contractor Management Solution and gaining control over spending where there is a notorious amount of process complexity, duplication, and leakage.

Take control over this area today and reach out to NHD for a demo of our software and see what it can offer in digitalized efficiencies and management for optimized savings.

The final area in which .5-1% cost avoidance can be achieved is through the payment features in a Contractor Management Solution. Sourcing, Procurement, and Maintenance departments can easily be bogged down by suppliers asking their company contacts to track down where their payments are at in processing.

Contractor Management Solutions allow suppliers to see every part of the payment process in real time, which frees managers from having to constantly track down where payments are at. This single process can amount to a great deal of time when conducted manually, depending on how many approvers and steps are in the payment process. Avoiding this type of cost allows managers to be in the field or the office to focus on other work instead of constantly chasing down information for suppliers they want to keep strong relationships with.

Cost savings can also be achieved in a Contractor Management Solution like AES/32 using their unique ‘One-Click’ payment processing solution. Large enterprise companies often have a long tail of small suppliers they engage for business, and the payment process can easily become a point of contention for these suppliers who are not regularly involved in the company’s payment processes.

The One-Click solution allows suppliers set up in the Contractor Management Solution to submit billing against a lump sum or milestone amount in as little as one click. Suppliers love this feature as it reduces administration costs for their billing departments, and buyers love this feature for the simplified billing and payment processes, which can also be managed in an automated way. As mentioned above, a Contractor Management Solution also allows all the smaller suppliers to see where their payments are at in the process without having to chase down information through calls and emails.