Having the right tools matters. You might be able to use a screwdriver to hammer in a nail, but everyone can agree a hammer works much better. If you are only hanging one photo, you might be able to MacGyver the nail into the wall with only a screwdriver, but if you are building a house, it is worth it to invest in a hammer. The same thing goes with your accounting software. You may have a solution that is getting you by with the day to day necessity like paying vendors and invoicing customers. However, are you merely getting by with your accounting software, or are you utilizing your accounting software in such a way that can help grow your business?
QuickBooks® has 60% of the market share, but that doesn’t mean it’s always the right tool for the unique needs of a contractor. Transitioning to an accounting software that is specifically designed for the construction industry is what makes accounting software such as Foundation and ComputerEase so valuable. These accounting systems are designed for contractors which makes the capabilities much more suited to the needs of the industry.
How accurate are your estimates?
Let’s start where it counts — money. Are your jobs coming in at estimate? Do you find it frustrating when you review a job’s actual costs and revenue at month-end, quarter-end, or worse, year-end and find out your estimates weren’t close? As you know, if the estimate is inaccurate, your contract bid is also inaccurate. That’s why it is important to track the costs that go into each job, including indirect costs, and monitor job cost reports routinely to track actual results against the estimate. Construction specific software, such as Foundation, will allow you to allocate indirect costs to jobs monthly with a click of a button. The software also has an abundance of specific job cost reports that can help you easily track the progress on each job.
How much do you rely on spreadsheets?
QuickBooks is very user-friendly, but that doesn’t mean it can calculate everything needed for construction projects. How often do you find yourself needing to switch over to a spreadsheet program for calculations and functions? What about inputting the same data into multiple spreadsheets? If you find yourself having to do data entry in spreadsheets or input values into multiple areas, it might be to your advantage to consider another option.
Is the software specific to construction?
Using an accounting software developed just for contractors can give you an edge with built-in features and functions designed specifically for your business. Foundation and ComputerEase are two examples of software solutions that were designed specifically for construction. They may help you avoid workarounds and even more importantly, offer opportunities for growth.
Software designed specifically for construction can handle:
- AIA billing: G702, G703
- Job costing
- Work-in-progress reports
- Production reports
- Projected labor
- Estimated vs actual
- Cost plus billing
- Construction-specific payroll
- Purchase order management
- Inventory control
- Indirect cost allocation
Giving contractors an edge
We helped one of our construction clients, Crystal, the Controller of a large subcontractor, make the switch to Foundation four years ago. She says:
“The WIP Schedule calculates the over/under billings and even has the capability to post the journal entry every month. I can now calculate overhead and base it off labor, materials, or both. I rely heavily on reports that compare the actual to estimated job costs, getting quick summaries to identify how costs relate to budget.
We use Foundation reports to deep dive into every transaction that has been coded to the jobs. This has been essential in determining if something was wrongly posted and identifying the cause of any overages. I can change the criteria of reports in countless ways, such as selecting a vendor to see how much they have been paid on one or more jobs. I can also add unposted payroll and invoices to estimate total costs, without having to wait until items are posted. The ability to accurately do job costing is vital for every construction company and we have found that with this software.”
Here to help contractors
There’s not always one right fit when it comes to accounting software. If any of these questions have sparked your curiosity about moving to a construction-specific solution, I’d invite you to contact MarksNelson. If you decide to make a switch, MarksNelson can help you chose the right solution and get started in the system.