Credit: Firmbee
Although many of Xero’s new offerings are designed for various markets, the construction industry comes as a primary beneficiary. After all, the industry is critical to economies as it accounts for about 12% of the global GDP, which is slated to progressively increase each year, given the high volume of urban development projects worldwide. However, the construction industry is being hammered by inflation, supply chain woes, and the threat of recession, which is why the industry may pay well to explore new vendor developments like Xero’s new tools and integrations.
Recent construction industry statistics show that 43% of subcontractors endure a waiting time of between 30 and 60 days until they receive payments and 30% wait for over 60 days. To make matters worse, construction companies typically work on multiple projects at different job sites at a time, with each site having its own influx of financial concerns. The staggering volume of transactions can sometimes overwhelm companies, leading to unrecorded entries, compromised financial accuracy, and operational delays.
Another serious concern is inflation. A report from the Associated General Contractors of America conveys that the price of non-residential construction materials has increased by 21%. Although the price of fuel has been decreasing, it is still significantly higher than what it was in 2021. The rates of fuel oil (68.8%), energy commodities (27.1%), and gasoline (25.6%) all experienced year-over-year hikes.
The company behind accounting software Xero has developed new tools and functionalities for streamlining business operations. The features include inventory management, sales tax management, and a solution for bank reconciliations. More importantly for construction businesses, the SaaS for small business construction solution now offers seamless integration with a popular construction management app, Procore, as well as a United Kingdom-based fintech app, Capchase.
Procore-Xero Integration
The Procore Xero integration is a single source of truth for construction financial data. Aiming to digitize construction, the now-linked platforms connect field and finance teams for real-time data recording, processing, and analysis. With the manual recording of data eliminated or reduced to a minimum, accuracy is upheld since the integration limits the occurrence of human error. In addition, the analytics engines of both platforms work hand-in-hand to process budgets, purchases, expenses, and receivables, among many others.
Xero and Procore both carry expansive toolsets, and the integration creates a dynamic workflow between the two applications. For instance, Procore can assign budget codes to items recorded on Xero, enter commitments like purchase orders and change orders onto the appended purchase order, and send subcontractor invoices to be filled under billing on the accounting platform. Meanwhile, Xero enables Procore users to reconcile costs, match contacts with companies, categorize projects, and log bank transactions and commitment payments issued.
As a result, construction companies can reduce project delays, raise margins, help establish efficient workflows between field and finance teams, and decrease the likelihood of profit fade and the manual duplication of data. Xero’s chief growth officer, Chris O’Neil, added that the integration can help construction businesses improve their operational efficiency, scale their operations better, and mitigate risks.
New Xero Features and Capchase Integration
Besides its Procore integration, Xero developed a host of new functionalities. The accounting platform is slated to release a new inventory management solution that will enable business users to manage inventory from various locations, have an overview of an operation’s financial health, and hasten data reconciliation procedures. This is critical to the construction industry since companies routinely work with multiple project sites, each involving a set of transactions.
The accounting software company also partnered with tax compliance app Avalara to develop tools for simplified sales tax workflows, tax management, tax calculations, and compliance change management. Xero also offers a HubDoc Bank Statement Extraction tool that allows users to extract information from PDF bank statements. Meanwhile, its updated interface design makes working with the app easier than before.
Construction companies and other businesses would need easy access to additional capital, given the typical costs involved in each project, which is why Xero forged an integration with fintech platform Capchase. Xero users can easily apply for growth capital with streamlined approval as financial data between the apps are in sync. According to Capchase, users can obtain funds in 48 hours after the initial application.
Moreover, Xero partnered with a sustainability firm, Cogo, to release a carbon footprint tracking application, Cogo Business Carbon Manager. Using fuel-powered vehicles and equipment, construction companies can leverage the app to help clean up their act.
Accounting Benefits of SaaS to Small Business Construction
Coming into play in the aforesaid areas of concern, the integration between accounting software and a construction management platform enables companies to organize their assets, efficiently record and consolidate transactions, prepare bills and invoices, and reconcile financial information. Furthermore, Xero’s new tax tools, care of its partnership with Avalara, ensure that the right amount of tax is applied to transactions.
While the Procor Xero integration and a slew of accounting solutions won’t affect price hikes, these can vastly improve operational and financial efficiency. As a result, construction companies can complete projects faster with fewer financial concerns. This allows them to take in more projects, which in turn raises their incomes. Should they need extra funds to take on larger projects, companies can leverage the Capchase integration to obtain more capital.
Highlighting the benefits of SaaS for small business construction operations, Xero intends to gain a larger share of the accounting software market while contributing to the welfare of its clientele. The company potentially sets new standards for growth within its organization and the users it serves.
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