This time of year, we talk with many construction companies considering a new accounting software purchase. Maybe it's the change in seasons, the closing of the calendar year or the tax season looming on the horizon; what ever the psychological trigger, there are rational reasons to replace generic accounting software with a construction-specific accounting and job costing system. Here are the 5 top reasons we hear from companies thinking about a purchase.
- Eliminate double-entry – Reducing double-entry helps construction firms realize significant time and cost savings. In many cases the increased efficiency alone will provide a strong ROI on the software purchase. Construction accounting software automatically allocates information to corresponding jobs and categories in a system. Combined with construction project management software and construction estimating software, it can eliminate double-entry of data and financial transactions across an entire organization.
- Improve audit trails – Audit trails help companies track not only what changes were made, but who made them, and when and where they occurred. With multiple users accessing the system, it's likely that mistakes will happen and therefore necessary to identify errors before they become problematic. Construction accounting systems allow you to set unique levels of authority and permission for each user in the system. What's more, audit trails reduce disagreements and risks of litigation.
- Accommodate multiple pay rates – Managing wages for both union and non-union employees complicates payroll. Accounting is often required to manually enter data for the pay rates of each employee. Construction-specific payroll systems automate this process, and pay the correct rate based on the job and classification of work. Additionally, most systems are able to generate certified payroll and worker compensation reports that meet the requirements of government regulations.
- Manage equipment and machines – Equipment management is critical to controlling whether you win or lose money on a job. Accounting systems with an equipment management module allow you to see how much is being spent on maintenance and repairs, how many hours equipment is used, and whether it's cost effective to make repairs on individual machines. Advanced systems will automatically calculate depreciation and assign usage costs to work orders.
- Improve job costing – Possibly the most important reason for switching to a construction-specific accounting system is that it provides advanced job costing and reporting capabilities. A job costing system provides detailed cost breakdowns for each component of every job. These systems "speak your language" with support for CSI codes, T&M billing and AIA billing. In turn you can assign costs to the right code and generate reports that allow you to see what was spent on each division of the job. This helps you identify unexpected material costs, overtime hours and other factors affecting your profitability.
We've heard many other reasons for replacing accounting systems, but these are the most common at this time of year. What ever your reason for replacing, construction accounting software creates efficiencies, and helps construction firms gain better control over finances.