Integrated software is increasing in the construction industry, and accounting is a new area for it. So what is integrated accounting software? And why is it important for construction companies to look into integrated accounting software? Construction companies benefit from integrated systems because these systems connect different parts of the company. These connections make it easier for project managers, designers, and accountants to increase efficiency and accuracy. By increasing efficiency and accuracy, construction companies benefit. They also help destroy the data silos that prevent important information from passing between departments and even between general contractors and trade contractors. Integrated accounting software is revolutionary in the construction industry.
The Importance of Accounting In Construction
Accounting in construction is different than accounting in other fields. Restaurants, grocery stores, and the like use traditional accounting principles, since they sell things from a fixed location. However, construction businesses work at a variety of different locations. Construction companies complete unique and customized work at these different locations on a regular basis. This is what makes accounting in construction more difficult.
The typical accounting processes don’t fit with the world of construction. Accounting in construction needs travel time, packing costs, delivery, clean up, and even more costs associated with specific aspects of the job.
Construction companies tend to use the Percentage of Completion Method rather than more traditional methods. This means that revenue is based on the estimated profit from a contract and the percentage of completion in the project. These methods and differences are why construction companies use software tailored to them and their business. When companies use construction accounting software it’s important that it integrates with other software to automate workflows.
What is Integrated Accounting Software
So what is integrated accounting software? And how will it help your processes? An integrated accounting software can perform a wide variety of functions that make industry professionals lives much easier. Within an integrated system, you can estimate, report on, and monitor all your job costs at any time, anywhere. Additionally, you will be able to track and convert employee time into job-costed payroll, reduce data entry time, handle inventory purchases, and most importantly, you will be able to send information to customers easily, vendors, or back to the office from the field.
You will be able to slice and dice your information in a variety of ways to find more accurate costing, without creating a mess of your budget. Quickly implement advanced tracking features to see more and better information about what is, and isn’t, working in your business.
Integrated accounting software standardizes procedures and financial information. It’s a great way to connect the many functions of the back office with the field.
How an Integrated Accounting System Benefits Construction Industry
A company’s efficiency hinges on its ability to get work done in the field. With integration between the field and the office, tasks that used to take weeks will be done in a matter of minutes. Think about this, the foreman requests a change order in the field on his phone. Traditionally, that wouldn’t be possible. The foreman would have to find their laptop and create the change order on the computer. From there the foreman sends it to the project manager, and the project manager would approve or deny it. Once they’ve approved or denied the change order, they would send it back to the foreman who would send it to the accounting department. This is a long complicated process that involves switching devices, programs, and locations.
An integrated accounting software eliminates many of those steps. When the foreman creates a mobile change order, they can quickly send it to the project manager. After the project manager approves it, the foreman can approve it in the app and the data pushes through to accounting. The accounting department can immediately update the budget at this point. This saves companies a lot of time, but it’s not the only benefit.
Reduce Double Data Entry
Another great benefit by switching to an integrated accounting software is the reduction in double data entry. What this means is that no one must enter data twice, or manually enter data. An integrated accounting software takes documents and information in one system and can append it or use it in the accounting system. Using the change order example, once it is approved the accounting department pushes the change order into the accounting software. This means that the accounting department doesn’t have to read a paper change order, or fax and manually enter the data. So the overall data accuracy is increased.
Using an integrated accounting software is another great way to access real-time data about the business. The accounting department can use real-time data in the field from change orders, and other documentation to track the budget better. They can take that data and compare it to the estimates to determine estimation efficiency. By tracking estimation efficiency they might be able to shore up areas that are weaker.
Another great area where real-time data impacts integrated accounting is in employee time tracking. When the project management system tracks employee time, being able to push that information directly into the accounting system benefits everyone. The accounting department doesn’t have to track downtime cards or struggle with handwriting. All they have to do is import the data directly from the project management system. This way there aren’t mistakes that come from double entry.
Having real-time data and reduction of double-entry all around increases accuracy. The access to real-time data and reduction of double-entry helps companies improve their overall job costing methods. The data you get from accurate labor tracking and change orders improve the historical data. That way estimators can use real-time data to improve estimates. They have historical data they can compare the projects and see what sections they need to improve or are usually correct. Construction companies benefit from the increase in accuracy in all departments. It is one of the reasons why integrated accounting software is the best tool for a construction company.