Doing business teaches us a lot of things, but not all of them are true, and some can actually hold us back if we don’t know what else is possible. When it comes to construction accounting software, not knowing what else is out there can set false limitations on your business.
Myths don’t always make the world magical. In fact, sometimes they make our world more limited. Take this one for example: Short guys can’t dunk. That’s what most people believed until they saw 5-foot-7-inch Spud Webb leap to the rim. Doing business teaches us a lot of things, but not all of them are true. Some can actually hold us back. When it comes to construction accounting software, not knowing what else is out there can lead contractors to think the way things have been is just the way things have to be. That can set false limitations on your business. These myths are more than likely signs that a company has outgrown its current system. It’s time to shatter the misconceptions with new expectations.
1) “I Need All of These Spreadsheets”
It’s OK to get attached to your spreadsheets—you put a lot of work in them. But if you’ve been stockpiling a battery of “customized” reports outside of your accounting software, it’s a sure sign that it isn’t meeting your reporting needs. Standard construction reports like work-in-progress, percent-complete, gross profit and overhead allocation should be built into your construction accounting software. Keeping the same data in multiple places is a sure recipe for entry errors as well as lost time. In reality, you don’t need to live by spreadsheets if you employ a construction-specific accounting system with powerful reporting capabilities. Foundation offers an extensive array of predefined reports as well as easy-to-use report designers integrated with your centralized store of data.
2) “Job Costing is Too Complex for Accounting Software”
Whether you’ve been outsourcing your job costing to spreadsheets or haven’t implemented job costing yet, your experience with accounting software may have taught you that job costing is too complex for any one application to handle. Most general-purpose accounting systems track expenses on only one level of detail—this account or that account, this category or that. Construction-specific accounting packages, on the other hand, allow you to organize costs by jobs, phases, cost codes and cost types so you can easily track where your cash is going and where your profit margins can be maximized. Foundation also allows you to break out cost reporting according to project manager, cost code group, geographic area and user-defined categories. The truth is, your software should be able to be as complex as your business is.
3) “If I Want It Done Right, I Have to Do It Myself”
Accounting software that can’t job cost and doesn’t produce the reports you need can make it seem like the only way to get usable data is to compile it yourself. But information that takes too much time to retrieve is of little use to decision makers and project managers. Most small-business accounting systems are capable of providing financial statements, cash flow and trial balances. Yet up-to-date data like production reports, estimate vs. actual reports, percent-complete reports, projected cost to complete and committed costs are convenient and instantly accessible with a construction-specific system. Beyond standard financial statements, Foundation also features a general-ledger report writer for custom income statements and balance sheets. If you want data tracking done right, have a solid construction-specific accounting software do it for you.
4) “Construction Payroll Has to Be Hard”
After all, that’s why they call it construction payroll. Between union fringes, multiple jobs, prevailing-rates and multi-state deductions, how can you expect your accounting software to make it any simpler? Construction-specific accounting applications are made specifically to address the unique complexities of the industry’s payroll so that contractors aren’t left to perform countless calculations outside of their systems and hope for the best. Construction payroll is going to be complicated, but it doesn’t have to be hard. Foundation, for example, can (1) calculate an employee’s time to multiple jobs and phases, (2) compute multi-state and local taxes, prevailing or union wages, deductions, fringes, and burdens, and (3) update your general ledger and job costing. Leading construction-specific software will offer 10 to 20 pre-check reports to verify the accuracy of your payroll before printing a single check. If additionally integrated with mobile technology for timecard entry and approval, and if paired with a dedicated construction payroll service, running payroll can become the simplest part of your business.
5) “We Perform Too Many Transactions to Expect Any Software to Work Well”
The more transactions a contractor completes, the more robust a database needs to be. Proprietary databases in off-the-shelf accounting software are designed to handle the limited transactions of small businesses, not the high-volume of transactions that characterize the construction industry. Even with a small construction company, these general-purpose programs can have you thinking that a cumbersome, sluggish system is simply a burden of the trade. But there’s no reason you have to be stuck with an undersized, overtaxed database. A solid construction-specific accounting system will use an open-system, relational database to give it more power, speed and integrity. Because Foundation is built around Microsoft SQL Server, it can grow as the company does, working smoothly far into the future.
Hard-working contractors shouldn’t let anything hold back the growth of their businesses—least of all a few myths that are easily overcome with good construction accounting software. Contractors who have run against these false ceilings should take another look at their options and consider a change to a construction-specific system. You already know your company can compete. See what Foundation can make possible for your business so you can keep reaching new heights.
*Published in Construction Executive