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Accounting Software Checkup
BY: FRED ODE
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NO. 2: TIRED OF REDUNDANT
WORK AND DOUBLE
ENTRIES?
Editor’s Note: Following is the second article in our ten-part series called,
“Accounting Software Checkup: Ten Ailments That Can Hinder a Healthy Bottom
Line,” by Fred Ode, CEO, chairman and founder of Foundation Software. Each “ailment”
will be discussed in detail to help you determine if your seemingly healthy
business has an underlying problem.
Nothing takes the wind
out of people’s sails like
doing repetitive, non-productive
work over…and
over…and over again.
Your accounting software—much
like your body—may appear healthy
from the outside. However, it’s very
possible that your program may be suffering
from some common ailments.
These ailments, if left untreated,
could lead to serious (and sometimes
fatal) results. As the “brain,” which
holds all the financial decision-making
data, and the “heart,” which
pumps cash in and out, your accounting
system is vital to the life of your
business.
This brings me to your current
accounting software program. You
say that it is easy to use, and everyone
understands it. But are there also
signs of fatigue and lethargy? Maybe
the workload has increased gradually,
but your company has learned
to adjust. Or maybe you accept that
busy work equals productivity. And
what if, rather than streamlining your accounting and financial operations,
your accounting software has
become the obstacle to efficient data
workflow?
In Part 1 of the “Accounting
Software Checkup,” we discussed
the over-reliance on spreadsheets
as a sign that you’ve outgrown your
current accounting software application.
Now, we will look at the time-consuming
processes that result from
a system that cannot accommodate
a contractor’s construction-specific
accounting needs.
Work-Around Solutions Can
Lead to Fatigue
Some companies are working harder
but less productively than others.
Consider, for example, the construction
company that uses its small
business accounting system mainly
for accounts payables. Let’s assume
that they also use a payroll service to
issue employee checks, a third-party
billing system to create invoices and
track income and Microsoft Excel for
job costing and estimating. To generate
the necessary financial statements,
payroll and accounts receivable
data must therefore be collected and
manually entered into the accounting
program. In addition—if the company
hopes to have any control over
job costs—the estimated costs and all
the actual costs must be re-entered
into spreadsheets. Not only does this
system of accounting and recordkeeping
result in a lot of manual work, but
it’s also error-prone.
Okay, so maybe your construction
company spends way less time
on data-entry tasks. However, unless
you are using a construction-specific
accounting system, chances are good
that you too are wasting valuable
resources on non-productive tasks
that could be performed in more efficient ways.
The Multiple-Entry Malady
Many companies experience difficulty when they attempt to use
their generic or off-the-shelf systems
for all construction accounting and bookkeeping functions. Since the
software will not integrate, they end
up spending much of their time entering
the same information in different
areas of the program or multiple programs.
What’s more, when data-entry
mistakes are made, and the accounts
don’t balance, it leads to even more
manual entry work. Time is wasted
trying to find where the mistake was
made and then making corrections in
all the separate locations within the
program.
In contrast, sophisticated construction-specific accounting systems
are integrated, meaning they pull
data through the system and deposit
it into the appropriate modules. For
instance, when employee timecards
are entered, the information automatically
flows to the general ledger and
job costing modules. Likewise, every
time a customer invoice is created or
a payment is received, the general
ledger and job costing modules will
be updated as well. In addition, most
systems have default settings, which
help greatly reduce data-entry time
and prevent errors.
Century Fire Protection Inc., a
fire sprinkler contracting company,
has realized many time-saving data entry
efficiencies since switching to
an integrated job cost accounting
system. Besides being able to copy job
budgets and have recurring invoices,
employees were thrilled to learn that
they could also create a proposal and
turn it into an invoice.
“It’s a huge timesaver,” said Jody
Mathis, the controller. “If you have
the ability to copy an invoice, so all
you have to do is change the customer
and job number, well, that’s a
beautiful thing!”
Relieve Company-Wide
Redundancy Problems
Within contracting companies,
redundant data entry also occurs
across departments. Often, it happens
when the company’s accounting system—
the main repository for financial
and job cost data—is not capable
of integrating with other specialized
software, such as estimating or project
management.
Here are just a few examples:
The bid coming from the estimating
department gets passed on to
accounting to prepare a job budget. It
was created in a stand-alone software
system with no exporting capabilities,
so the bookkeeper must manually
enter, line-by-line, the figures
into the job costing module. At the
jobsite, project managers are using
spreadsheets to track their jobs. They
enter the same job cost data held in
the accounting system, only they
have their own specific reporting
needs. Meanwhile, the job foreman
uses a notepad to tabulate worker
hours, then transfers the data to
paper timecards. These timecards are
faxed into the accounting department
where employees spend hours
manually entering the information
into payroll. And on it goes.
But it doesn’t need to be that fragmented.
In addition to seamless integration
between modules (such as
payroll to general ledger to job costing),
many construction accounting
systems also offer the added benefit of integrating with popular third
party software products for estimating,
time card entry and so on.
At Century Fire Protection, for
example, another great time and
money-saving benefit of updating to
a construction-specific accounting
system relates to the software’s ability
to interface with Microsoft Excel
and perform database queries outside
the system. Now, instead of having
many payroll clerks key in timesheet
data (and have access to sensitive
employee-earning data), the information
from Excel flows seamlessly
into the accounting package where it
is processed. “Today, we have just one
person cutting payroll checks, usually
more than 400 each week,” Mathis
said. “We’ve shaved off at least eight
to ten hours of processing time.”
Whether you suffer from data entry
duplication by two or more
individuals, repetitive keystrokes or
redundant work that just feels slow
and inefficient, now is the time to
question the cause. It is quite possible
that the fatigue you are feeling
comes from an underutilization
of your present accounting software
system. Or could it be that your “one-size-
fits-all” accounting software is
simply a bad fit for your business?
Fred Ode is the CEO/chairman of
Foundation Software, developer of construction
job cost accounting software
called FOUNDATION for Windows. For
further information on FOUNDATION
for Windows, visit www.foundationsoft.com.
Fred Ode can be reached directly
by phone at 800.246.0800 or e-mail
fred@foundationsoft.com.
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