Cash is king, so it makes absolute sense that accounting software is the most utilized software program at a construction company. According to the JBKnowledge 2017 report, the workflows most dependent on software are Accounting, which stands at 85%. The features in accounting software for construction companies varies greatly. All accounting software can manage the basics of Accounts Payable, Accounts Receivable and General Ledger. However, construction companies have a unique business model that requires specialized accounting software designed specifically for construction.
Make sure that accounting software you choose can address those unique requirements as stated below:
Construction companies that have multiple offices and divisions need accounting software to track, manage, and analyze financials holistically as well as by offices or divisions. Each office or division has separate financial targets that contribute to the overall profitability of the parent organization. The organizational structure and workflow in construction companies with multiple offices and divisions varies greatly. Large enterprises benefit from a solution, such as Sage 300 CRE, for its ability to effectively tracking financials for multiple companies while providing consolidated financial statements.
Job cost tracking
The profitability of a project is dependent on many factors, so the ability to track job costs to specific cost codes is an important feature in accounting software. Tracking actual costs with estimated costs in real time keeps you informed of how a project is tracking in terms of profitability. Accounting software for construction companies like Sage 100 or Sage 300 CRE helps you closely manage job costing. Especially important, they provide the ability to set up alerts on items that may negatively impact job costs.
Prevailing wage rates, union and non-union pay, and government compliance are just some of the factors that make construction payroll extremely complex. Payroll4construction.com provides payroll services exclusively to manage these complexities. The Payroll4construction.com team utilizes Foundation Software for their payroll processing. In fact, the same team that manages Payroll4construction.com manages Foundation Software.
Some projects require AIA Billing, a standardized form developed by the American Institute of Architects for progress billing. AIA Billing utilizes the standard G702 and G703 forms to bill according to the progress of the job. Foundation Software has built-in AIA billing tools to create AIA billing records and schedule of values. Then, the information can be printed directly to preprinted AIA form or blank paper. With the AIA billing module part of Foundation Software, the data in the AIA billing record is posted to the General Ledger and Job Costing.
Time & Material Billing
For projects that do not use AIA Billing, your construction company may bill according to time and materials. Accounting software for construction companies generates invoices based on billable project expenses and any applicable markups. Foundation Software provides complete flexibility in automating time and materials markups. Whether you markup billing by fixed-rate, percentage, cost-plus, etc., Foundation allows markups any way you choose. Similarly, Time and Material billing is posted directly to the General Ledger and Job Cost.
Construction equipment represents a significant investment for many companies. Accounting software for construction companies provides the ability to enter fixed assets and manage depreciation schedule to comply with IRS regulations.
In addition to equipment, many construction companies manage warehouses full of products. Managing the products and controlling inventory is a critical need. Accounting software for construction companies provides inventory control capabilities tracking the items, pricing, purchasing, and usage. Keeping a close track of inventory and any trends ensures your team always has supplies available to keep projects moving forward. Similar to billing methods described earlier, any usage of inventory toward a project is posted to the Job Costing to ensure accurate estimates versus actual costs.
Financial analytics and reporting
Quickbooks may be an ideal solution for small to medium-sized construction companies. However, their reporting tools are very extensive and customizable to assist you in managing your construction company. To show you the information you need and how you want to see it. Users can customize reports and email them on a scheduled basis.
Which accounting software for construction is right for your company?
There are hundreds of different construction accounting software programs available in the marketplace. The first step in narrowing down your choices is to filter out the options by your company size. Some solutions are more suited for small business, medium-sized businesses, and larger enterprise businesses. Usually, accounting software designed for small business is very competitively priced. However, it will not be able to support the complex workflows needed for medium to large-sized businesses.
Construction companies that are looking for new accounting software should ensure that there is integration with project management software as well as other applications that team utilizes. Utilize a solution for accounting that makes your accounting team happy. Similarly, you can utilize a solution for project management that makes your field team and project managers happy. As a result, with integrated systems to ensure the information flows seamlessly between both all teams will ensure that everyone is happy.