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Are Over/Under Billing Reports
Creating Work Overload?
Construction job cost accounting software can ease the billing reporting process
BY CHAD ODE
Construction accounting processes and procedures can
vary greatly from one contractor to the next. But one
common frustration shared by many construction
businesses is the tedious work of manually preparing
over/under billing reports, also known as work in progress
and percent complete. For companies using generic and small-business
accounting software, the over/under billing report is
often the least favorite of all accounting tasks.
What is it about this particular report that has bookkeepers
scrambling for their headache-relief medicine? For one, many
companies prepare this data just once a year—during the busy
year-end reporting season. In addition, as the company grows
and takes on more jobs, over/under billing reports become
exponentially more difficult to prepare, and at the same time
become more important for securing bonding and loans.
Without the ability to automate over/under billing reports,
contractors must go through a laborious practice that involves
gathering many separate reports and manually calculating the
results. Generally speaking, the process is as follows:
1. Contractors gather various reports, including:
a. estimate and change-order reports
b. accounts-payable reports, which are sometimes broken
out by overhead, materials and equipment
c. reports showing labor costs and billing reports for the
period
2. Next, contractors create spreadsheets and manually break
the information down by job.
3. Once the information is broken down, the contractor
must go through the information, job by job, and perform
calculations to find the percent complete and the over/under billed amount.
It might sound simple, but imagine doing this for 20
jobs, or even 200 jobs. It is a large assignment that makes
contractors and bookkeepers cringe. It can take hours, or
possibly weeks, to gather the information needed to calculate
this report.
Relief through Construction Accounting Spftware
The good news is it doesn’t have to be this way. Using a
construction job cost accounting software, contractors
can eliminate 99 percent of the work. Having already entered
timesheet data and all invoices in accounts receivables and
payables, this report can be produced automatically. With the
information needed for the over/under billing report already
in the system, it’s just a mouse click away.
Best of all, when using a date-sensitive software that integrates
job costing with all other accounting modules, contractors
can create the over/under billing report throughout the year
for more efficient business management. At a glance, owners
can identify jobs that are underbilled, which could lead to
cash flow problems, as well as jobs that are overbilled, which
could make profits look unrealistically rosy. Most importantly,
this report—when reviewed regularly—helps owners identify
problem jobs in time to make adjustments.
Given these facts, why would a contractor continue to
create over/under billing reports manually? With the help of
good construction software for accounting, over/under
billing reports happen automatically. Not only can contractors
instantly prepare this financial report for outside agencies, but
they also have access to essential job status information when
they need it. The only thing lost is a lot of extra work.
Chad Ode is southeast regional sales manager for Foundation Software, developer of FOUNDATION
for Windows construction-accounting, project-management and scheduling software. For more
information, call 800.246.0800,
e-mail code@foundationsoft.com, or visit www.foundationsoft.com.
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