Work situation: how to improve your supplier relations and gain in efficiency?

In the property and construction sector, there is a central document that can be a source of tension: the works order. While this allows a supplier to get paid as they go along rather than waiting until the job is finished, the process of handling it is complex.

Delays can therefore quickly accumulate and create friction. However, there are ways to smooth out these relationships and make them more efficient for everyone involved. Let's see how.

Work situation and supplier relations

Work situation: what is at stake for supplier relations?

The works situation is a central document for those involved in the construction and real estate industries. Indeed, it will allow the suppliers to invoice progressively the progress of the building site. Each work status invoice will establish a progress point in the site and allow suppliers to be paid progressively. A closing invoice will then be issued at the end of the project to complete the exchanges.

When you consider the duration of certain sites and the amounts invested by suppliers, you can see what is at stake with this document. It is hard to imagine craftsmen putting forward thousands of euros (or even tens of thousands) in raw materials and wages while waiting for the work to be completed in order to be paid.

The work progress invoice is therefore a central document for those involved in the construction industry as it allows them to recover cash as the work progresses. It therefore ensures the survival of their company.

However, dealing with this document is not that simple. Firstly, because there are many players involved. Let's take a common situation: the main supplier will receive invoices from his subcontractors. He will compile everything to issue a work progress invoice to the customer. But before being paid by the client, this progress invoice must be validated by the project manager, who will check that the degrees of progress invoiced correspond to the actual work. The situation finally reaches the client, who must process and pay it.

This is a long and complex process, in which all actors lack visibility. All this regularly leads to payment delays which can cause major friction between clients and suppliers. Complications that can even lead to the suspension of work and thus delay the site.

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What are the deadlines for paying an invoice?

Just a reminder. France is one of the worst performers in the world when it comes to respecting payment deadlines. Before Covid, national companies were on average 11.5 days late. A sad observation that has probably not improved much since.

It is therefore easy to understand that payment periods are regularly a source of disputes. In relations between professionals, in the absence of a specific agreement, the maximum payment period is 30 days after the performance of the service. In the event of special negotiations, this period may be extended to 60 days or 45 days end of month.

Most of the time, it will therefore be a matter of paying suppliers within 30 days. This can be very complicated in the case of work situations. In this case, the client is completely dependent on the time taken by the project manager to validate the situation. Sometimes the client is not even aware that a situation has been issued and is awaiting validation. He therefore only receives it once it has been validated and sometimes already late...

Gaining efficiency to improve supplier relations

Now that we have established this, how can we improve everything and make customer-supplier relations more fluid? How can payment times be reduced and exchanges simplified? The main problems we raised earlier could be alleviated with two main improvements: more efficiency in exchanges and improved visibility on processing for all actors. Let's look at this in detail.

Dematerialising exchanges

As we have already mentioned, the exchanges are complex when dealing with a works situation. Especially as there may also be some back and forth between the supplier and the project manager before validation. One of the main points of friction in these exchanges comes from the fact that most situations are still exchanged on paper.

When there are round trips between the different actors, postal delays add up and make the exchanges more cumbersome. As in most processes, dematerialisation could bring major gains in efficiency and time. Indeed, going completely electronic for the transmission and processing of status invoices would considerably reduce delays. In addition, some of the input and processing steps could be automated.

A relatively large potential saving of time and therefore money for all actors, suppliers and customers alike.

Improving visibility for all stakeholders

As we have said, the client has no visibility of the invoices awaiting validation by the prime contractor. In the same way, the supplier has no visibility on the processing of his invoice once it has been sent to the latter. The two main parties concerned are therefore completely blind if the project manager takes time or forgets to validate the document.

Another area for improvement would therefore be to provide more visibility to the various players. By allowing them to dematerialise exchanges within a single platform, this would enable both the supplier and the customer to know where things stand. And therefore to be able to follow up on each other if things drag on. In short, to prevent conflict as early as possible.

This is exactly what we do with our work situation management module. Thanks to Freedz, the client simply allows his suppliers to submit work situations directly on the platform in a dematerialized way. The project manager is notified that he has to validate a situation on the platform and the client also sees this. Once validated, the situation is automatically transmitted to the client so that he can process and pay it. The supplier can follow the various stages of processing via his interface.

This is a way of improving efficiency and visibility for all the players and thus of calming relations around this document, which is so crucial for both parties.

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