Download
this construction software article
Accounting Software Checkup
BY: FRED ODE
|
 |
| |
 |
See why contractors use FOUNDATION as their construction accounting software!
(click here) |
|
 |
|
| |
 |
| |
|
NO. 3: HAS INCONSISTENT JOB COST
REPORTING LEFT YOU
FEELING IRRITABLE?
Editor’s Note: Following is the third 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.
I don’t know how the job is
doing.” “I don’t have any
report to show that.” “There
is no data from previous
jobs.” These are comments
that no contractor wants to hear.
Unfortunately, they are probably
all too familiar for many contractors
who continue to use general
bookkeeping or outdated accounting
software to run their businesses. But
contractors must identify the main
cause of this distress and exasperation
rather than take it out on their
field superintendent, office manager
or estimator.
Why Job Costing Software
Makes a Difference
Trying to get job cost reporting from
an off-the-shelf general business
accounting system is like trying to
dig a fifty-foot trench with a garden
shovel. You might be able to do it but
not without a lot of pain and effort.
Nevertheless, lots of contractors
attempt it anyway. Without a job costing
module, they often try to do job costing through their general ledger
reports. For example, they might
set up “Labor Account A,” “Labor
Account B” and so on. But nowhere
does this begin to resemble a system
for tracking costs by job. In the end,
the general ledger cannot be used for
job costing; it is account driven, not
job driven. The general ledger has its
purpose (providing accurate, current
financial reports), which is different
from the job costing module’s purpose
(tracking and reporting all job
costs).
Nearly every business accounting
system will handle bill paying,
invoicing and other bookkeeping
functions in similar ways. But only
job costing software can produce both
financial reporting and the detailed
job cost reporting contractors need to
run their jobs without requiring any
additional data entry or exporting of
data to another system. Every piece
of data entered into a construction
accounting system flows directly to a
job. There are no detours or dead ends
that can cause errors (such as manual
reconciliation) or slow productivity
(such as duplicated data entry).
Detailed Reporting from
One-Step Entry
The real advantage of having a job
cost accounting system has more to
do with information access than how
a report is created. When you suddenly
have the ability to see your actual job
costs and revenue on a job alongside
your estimated costs and profits, you
have decision-making power. With
every time-sheet entered and every
transaction posted, your accounting
system is continuously updated
with real-time job data. With instant
access to data, you can turn bad jobs
around and avoid committing the
same costly mistakes on future jobs.
Let’s say a drywall contractor
finishes a job and profits are close
to what was estimated. Without a
detailed job cost report broken down
by job code, task or phase, this contractor
may never learn how they
really did on the project. He may
discover that they made more than
expected on painting and drywall but
actually lost money on the acoustical
ceiling work—he might miss the all-telling
facts that could help keep his
future jobs on track.
Irritability Can Lead to
Nausea
Contractors get irritable once they
realize their generic/small business
accounting systems cannot produce
important job costing reports. They
think creating reports in spreadsheets
is the solution. But spreadsheet solutions
almost always cause more problems
and more work. Irritability leads
to nausea when contractors discover
that nearly all of the information
needed to run their businesses resides
in disconnected islands of data.
With a good job cost accounting
system, contractors have access to
hundreds of standard job cost reports
and customizable reporting options.
They can get immediate access to
percent complete, estimated versus
actual, unit cost reports, production
reports, work-in-progress, over/under
billing, cash flow by job and so on.
Are you in distress because of
inconsistent, inaccurate or untimely
job cost reporting? Are you having
trouble accessing information you
need about how your jobs are doing or
how you did in the past? Construction-specific accounting software may be
the relief you need.
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.
|
