What is Construction Accounting and Job Costing software?
Construction accounting and job costing software is a set of applications which cover the complex requirements for all financial management processes including job costing, equipment management, subcontracting and payroll processing. Software used in the construction industry allows staff to allocate job costs by job and CSI code through a job costing module.
There are different trends you need to understand when evaluating what Accounting and Job costing software to use:
The increased need to collect business intelligence
Old construction systems used to mainly focus on recording transactions, but those records are now used to provide businesses with valuable information and hindsight on their performance over each project. Reports should be made with data being easily extractable for the purpose of increasing business intelligence
Modernization of technology
Programing languages evolve as technology changes, and firms looking to upgrade their systems often do it because their current systems fail to meet those modern requirements because they are using an outdated programming language. Buyers should always consider the technology behind a platform.
Most leading construction software offers a wide variety of functions, from project management to bid management. Software solutions are facilitating the integration of different modules and whilst software vendors are increasing this integration, it is worth considering whether your firm prefers to use a best-of-breed solution against a fully integrated software suite.
Here are the common features involved in construction accounting and job costing software:
The core module of construction accounting software includes functions such as job costing, payroll management, financial reporting, general ledger, accounts payable, accounts receivable, purchase orders and general ledgers.
Accounting for fixed assets
Accounting for assets and properties that are not easily convertible into cash. These are tangible assets such as equipment and property which contrast to liquid assets such as cash and bank accounts.
Tracking of equipment
Tracking focused specifically on equipment used by the company.
Managing company inventory across different projects and different sites.
Managing the financial and job costing aspect of contracts across multiple projects.
Tracking of time
Tracking expenses and costs across all projects.
Why Use Construction Accounting and Job Costing software
There are many benefits to purchasing and using construction Accounting and Job Costing software:
- Modern software helps improving visibility into projects, which provides a better look at the profitability of each job and of the whole company. Data is collected more accurately with less errors and as such construction job costing improves reporting over any generic accounting software.
- Having a better insight on job costs means that better estimates are created in the present but also for future jobs. By identifying labor and material cost trends, construction accounting software helps keeping jobs on their budget, Overall this leads to far better cost control.
- Rather than contractors having to create different spreadsheets to account for different tasks, the system handles all accounting data. This leads to less errors and saves time by not adding double entries of that data.
Your use of Construction Accounting and Job Costing software will vary depending on your needs and the needs of your business:
- Small contractors are often using entry-level software such as Quickbooks and Peachtree but as they are growing they require more complete job costing and payroll management functions from their software. Looking for mid-range solutions is the right thing for this type of buyer as affordability is still an important aspect of finding the right software package
- Large construction enterprises generally need to consolidate their finances as they deal will multiple corporate entities. Furthermore they will perform different types of work and will have many different types of users. Those firms should look to replace their legacy systems with more modern solutions.
- Service contractors need more than just core accounting, they also require scheduling and service contract management, service dispatch and spare parts inventory management. They should look at vendors offering financial software for contractors as they are looking for systems which combine field service management with accounting.
- Civil contractors have specific requirements set around tracking work crews, equipment management, fixed asset accounting along with materials dispatching and management. They also need a system designed to perform unit billing. Some software vendors specialize in that market.