Integrate accounting software with project management software to improve decision-making.
Advancing technology in the workplace is a wonderful thing. However, the ubiquity of applications and their many uses often brings one potential pitfall: a failure to integrate. With all of the business apps available, you end up “app flipping” to check on critical business functions that keep your processes moving. Wouldn’t it be transformative to have one app that does everything? This article focuses on two critical areas of the construction firm that have been technologically isolated and the advantages of integrating your accounting platform with your project management platform.
You have a very robust accounting platform. It does everything you need and your office staff loves it. You also have a game-changing project management solution that your field crew loves. Problem is these two separate programs lack integration. Most subcontractors agree that improved communication between the financial and operational sides of their businesses is critical for better decision-making and greater efficiency both in the office and on the jobsite, and will yield higher profits.
However, the software systems used by their office and field crews are not built to handle communications between the two, or many attempts have failed. Non-integrated programs can quickly become cumbersome to manage and create issues, such as duplicate entry, data reconciliation, data accuracy and siloed information. The results are with significant delays in project and financial reporting across the organization.
Siloed information can quickly turn a profitable project into an expensive nightmare. Ensuring your projects are profitable is the backbone of any successful construction firm. Tight management and controls include a tight grip on work in progress (WIP), visibility of project costs, accurate forecasts and management of revenue and cash. But when you are running disparate accounting and project management systems, your control becomes nonexistent.
For example, field personnel are working with one set of figures and are likely reporting very different numbers or results compared to what accounting sees. Unfortunately, discrepancies in costs are often discovered when it is too late, and the project results in a loss rather than a profit.
As competition grows within the construction industry, companies running disparate software are at a serious disadvantage because it fails to effectively help minimize project risk. To remedy the situation, companies are moving toward construction-specific software that integrates transactions, processes and workflows across the organization and is accessible to all staff on any device at any time.
1. One version of the truth
Every company starts out with the best intentions when purchasing their first software package. Typically, this is a generic, one-size-fits-all accounting platform that was not designed for the construction industry. While this solution may work for a while, eventually the company is going to grow, and various other systems are implemented to support different business functions. Picture this: your payroll department implements a stand-alone system; one project team uses a complex set of formulaic spreadsheets; another project team uses their own templates. All of these different documents are permeated throughout the organization—and most of the time they are out of date. This creates chaos and a management nightmare.
In contrast, a fully integrated system contains all project, operational and financial information across the organization in one system—creating one version of the truth. This allows businesses to be confident in their information to make business decisions.
2. Increased productivity & standardized processes
If your business is running multiple systems, chances are the same information is being entered multiple times by different people into different systems. For example, your field foreman enters information into a standalone payroll system. That same labor cost is booked against a job in the job costing system by another person. Then, that same labor cost is journaled into the accounting system. Three different people entered the same information into three different systems. Imagine how much time would have been saved if the systems were integrated. There would only be a single entry by a single person into a single source, guaranteeing no duplication of effort and only one version of the truth.
The ability to make timely business decisions is essential to every successful company. This is stymied by the time wasted on reconciling accounting and project data, plus the time it takes to get accurate reports. With the implementation of an integrated system, companies are forced to adopt more efficient workflows. Data is only entered once, complying with standards, validations and data security that is enforced and controlled, thereby creating efficient operational processes.
3. Reliable information & more accurate forecasting
Data integrity is crucial for any company in any industry. Using the payroll example above, running disparate systems compromises the data integrity, which ultimately leads to business decisions being made using inaccurate and outdated information. Project forecasting is crucial and end-of-month project forecasting is generally the norm. Project managers want to make their projects look profitable, and this sometimes leads to data manipulation, which understates the forecasted final cost. Needless to say, this can have severe consequences on the profitability of the project and the company’s bottom line. By implementing an integrated accounting and project management system, there is no room for data manipulation, as an understated cost becomes evident immediately.
A construction firm’s success rests on the shoulders of its people making better decisions. An integrated accounting and project management solution maximizes business results on every project. Running disparate systems is a thing of the past and will only slow down a firm’s growth. More and more firms are moving towards the integrated approach and are reaping the benefits of having a single source of truth to facilitate their decision-making.