Construction Accounting Software: The Benefits of the Right Software Tools

Using the Right Software Tools for Building Your Company

In today's age, no contractor would think of taking on a project without their power tools. Paradoxically, though, many construction companies still use manual accounting methods to try to build their business. Smaller contractors frequently attempt to cut costs by using pen and paper almost exclusively. Larger companies often have a hodgepodge of unconnected software programs that may not have been designed specifically for the unique needs of contractors.

Having inadequate software tools yields similar results to being under-equipped on the job site. It takes longer to get things done, the results are not as good, and it's more expensive in the long run. While a nailgun may cost 10 times as much as a hammer, every contractor will make the investment in order get jobs done in a fraction of the time, ensure consistent results, and bring labor costs down. Of course, the same logic applies to software. Today, successful contracting businesses are making the decision to prepare themselves with the right tools to effectively manage their construction accounting.

The Value of Integrated Construction Accounting Software

But many construction companies who have invested in accounting software still may find themselves struggling with inefficient processes. In cases where investments in software failed to deliver the expected results, skepticism towards additional investment is a fairly natural result. One of the main culprits for inefficiency is the lack of a single integrated system. Many companies start off with less expensive bookkeeping systems. The natural tendency is to try to find "work-arounds" where the main system comes up short. After a while, there's often the official books and a whole other set of financial data tracked on paper and in spreadsheets. Because data is not centralized, it's difficult for decision-makers to make sound business decisions. Many businesses struggle to keep up with schedules for labor and equipment usage, expected cash in- and out-flows, and even the completion status of a job in progress. Of course, without accurate info in these areas, it's nearly impossible to maximize the profitability of job scheduling and resource allocation.

Software Designed with the Contractor in Mind

The good news is that the software industry has responded to these challenges with software programs designed specifically for the unique needs of contractor businesses. Construction accounting software packages speak a language that is familiar to companies in the industry. These packages naturally handle basic accounting tasks such as receiving payment, paying bills, and creating top level financial reports. But they also address construction specific issues such as: work in progress, percentage of completion, retainage, job costing, estimated vs. actuals reporting, job profitability, project management, and change orders. There are a number of signs that you can look for to see if it is time to increase the power of the software tools you use to ensure your company's efficiency and profitability.

How to Tell if You Might Need Construction Accounting Software

Construction accounting software may provide an answer to increasing productivity and revenues, if you:

1. Experience difficulty assessing job profitability before or after jobs,
2. Re-enter the same data in multiple areas,
3. Have trouble easily scheduling labor and equipment,
4. Find yourself waiting for materials, equipment, and labor to become available to perform work,
5. Are unable to determine when a job will be completed,
6. Struggle with disappearing profit margins when the full costs of a job are calculated.