I’ve heard certain builders are on “auto-pay.” What is it and do I need it?

Auto-pay is a general term for payments that are triggered by 1) having been issued a purchase order and 2) having the items on the PO tied to a construction task in the field.  When the builder’s superintendent approves the work as completed in the field, the related purchase order becomes part of an accounts payable batch in the builder’s ERP and posts as an invoice.  The trades no longer send in invoices, they are truly paid from PO and satisfactory work completion.

This process saves time and money for both the builder and the trade.  Many programs such as Newstar, BuildPro/SupplyPro, Sapphire Build, and others offer this great feature.  The Cornerstone team can help you roll this out in your organization.

What is Positive Pay and Do I Need It?

Positive Pay is an automated fraud detection tool offered by the Cash Management Department of most banks. In its simplest form, it is a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by the company. All three components of the check must match exactly or it will not pay.

How does Positive Pay work?

Positive Pay requires the company to send (transmit) a file of issued checks to the bank each day checks are written. When those issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, and dollar amount. Sometimes the payee name is included, but is not part of the matching service.

When a check is presented that does not have a “match” in the file, it becomes an “exception item”. The bank sends a fax or an image of the exception item to the client. The client reviews the image and instructs the bank to pay or return the check.

There is generally a fee charged by the bank for Positive Pay, although some banks now offer the service for free. The fee might well be considered an “insurance premium” to help avoid check fraud losses and liability.

Many of the mainline accounting or ERP systems offer this feature to create the file to be sent to your bank.  Give Cornerstone a call and we can help you get this fraud prevention function running.

How to get my superintendants to update their schedules daily?

To get the superintendents to adopt a new tool, it must do something for them.  Demonstrate what benefits the field will gain by using the scheduling tool.

There are several things that you can do to see that schedules are updated daily, depending upon the approach that fits your company culture best:

> Have the system send out reminders, follow-up information, etc. that the superintendent previously had to remember to do. For example, six weeks before the cabinets are to be installed, have the system send a reminder to the installer of the upcoming date. This can help ease the lag time issues.

> Use the information in the schedule at the routine backlog meetings. Have the schedule information be the one source of truth. If we allow “off-line” schedule related information to be used, your scheduling tool becomes redundant and is left by the way-side.

> Provide training. Sometimes tasks don’t get done on time because people aren’t sure how to start or complete them correctly. Providing access to training and refresher courses pave the path to compliance.

> Using the schedules and your back-office system, implement auto-pay. The schedule now is critical to the superintendent and his trades. The schedule now saves the superintendent time in approving invoices, saves the trades time not creating invoices, gets the trades paid quicker and makes you a builder partner of choice.

> Get management involved. Sometimes people just need a little nudge from above to grasp the importance of some tasks. If management is using the data and speaks up when it is wrong or lapsed, people will value the use of the tool.

What’s the difference between Power BI and SSRS?

SQL Server Reporting Services (SSRS) and the Power BI Service are both Business Intelligence tools designed to present data to the end user. While they are both part of the Microsoft BI stack, they are geared towards different audiences and intended to be consumed in different manners. Power BI is intended to leverage an existing data warehouse, providing analytics based on a snapshot of data. This allows the power-user to ‘self-serve’ their reporting needs and drill into the same data from multiple perspectives.

An SSRS report requires a developer or report writer to design and deploy a static report layout, however SSRS can read data real-time and reports can be delivered to users through the browser or on a schedule. SSRS does have drilldown capabilities, however the Power BI interactive visualizations provide a more interactive experience for the end user. SSRS comes with SQL Server Standard or Enterprise Editions and is hosted locally, while the Power BI service is a cloud based solution that requires O365 licenses and does not have robust security options until reaching the Enterprise level. SSRS is the go-to solution for reporting, while Power BI, based on Excel’s Power Query, is nestling in as the future in interactive dashboards.

Have questions about which BI solution fits you best or if you should consider both options?  Don’t hesitate to reach out, we’re happy to help.

My warranty cycle time is 3 days, is that the average?

Warranty cycle time of 3 days is not bad at all. Of course, you should be tracking different types of warranty with different planned response times. Your “normal” warranty call with a response time of 3 days is not bad. Most builders are striving for 2 days. But, your “emergency” warranty calls (burst pipe, no heat, popping breakers) should have a target of immediate or less than 4 hours. Tracking these cycle times is very important to customer satisfaction and loyalty. A customer can’t be loyal if they are not confident that you will take care of them. In this world of immediate response, be sure you have a touch point of phone call or email prior to being able to get a tech to the home. Communicate who is coming and approximately when.

 

I have 75% variance for PO. Is that bad?

A variance should represent a surprise and unexpected event that we could not predict.

In any case, if you have multiple and large variances, that should send up a flag that something is wrong, or at least alert you to review your processes. And we’re not just going to “answer and run” on this one – if suspect something is wrong and need help tracking down root causes and cleaning up processes we are all too happy to help!  One of the key indicators of an internal process issues is the number and total dollar value of your variance purchase orders.  If you are building your homes on variance purchase orders, you cannot project true margins until well after you close the home.  This is dangerous water for any builder.