Five Myths That Could Hold Back Your Construction Business

Historically, the construction industry has often been slow to adopt new technologies. This is primarily because most believe in the common myths passed down throughout the industry. Whether it’s horror stories from other companies or the inability to conduct proper research, many believe the myth that investing in construction accounting software or other new construction technology is not worth it.

But that couldn’t be further from the truth. These familiar misconceptions are likely signs that a company has outgrown its current system. According to a recent survey by Research.com, 25% of US construction firms aim to increase their investments in construction industry accounting software platforms. So if you’re not investing yet, chances are you’re going to begin falling behind other companies.

If you’ve ever wondered: why is my construction company not making money anymore? How can I cut down on the costs of my construction projects? What are some things that might be stopping my construction business from growing? Then this article is for you.

Let’s walk through and debunk some of the common accounting software myths that could be holding back your construction business.

1. “I Need All of These Spreadsheets”

We know you put a lot of work into your spreadsheets. However, the manual entry required for spreadsheets can cause costly inaccuracies. Construction accounting software makes it easier to meet your reporting needs.

Standard construction reports like work-in-progress, percent-complete, gross profit and overhead allocation are built into accounting software. Most offer an extensive array of predefined reports as well as easy-to-use report designers integrated with your centralized data.

2. “Construction Job Costing is Too Complex for Accounting Software”

Whether you’ve been outsourcing your job costing or haven’t implemented job costing yet, you may think job costing is too complex for any application to handle.

That’s probably because most general accounting systems track expenses on only one level of detail — this account or that account, this category or that. Whereas construction-specific accounting software allows you to organize costs by:

• Jobs
• Phases
• Cost codes
• Cost types

This lets you easily track where your cash is going and where your profit margins can be maximized. It also allows you to break out cost reporting according to project manager, cost code group, geographic area and user-defined categories.

3. “If I Want My Construction Reporting Done Right, I Have to Do It Myself”

If you’ve previously used accounting software that can’t job cost or doesn’t produce the reports you need, you think the only way to get usable data is to compile it yourself. But that can make it difficult for decision-makers and project managers to retrieve the proper information quickly.

Construction accounting software can provide financial statements, cash flow and trial balances, as well as up-to-date data. Creating production reports, estimate vs. actual reports, percent-complete reports, projected costs and committed costs are also instantly accessible and often more robust.

Beyond standard financial statements, a detailed construction-specific system also offers general ledger reports for custom income statements and balance sheets.

4. “Construction Payroll is Too Complex to Outsource to a Payroll Service”

Between union fringes, multiple jobs, prevailing wage rates and multi-state deductions, the complexities of construction payroll can be overwhelming. Construction-specific accounting software is designed to address the unique complications of the industry’s payroll so that contractors aren’t left to perform countless calculations outside of their systems.

Construction payroll is going to be complicated, but it doesn’t have to be hard. Using construction accounting software with a powerful payroll module makes it easy to:

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 labor burden
3. Update your general ledger and job costing
4. Generate construction reports like certified payroll, EEO/ minority compliance, new hire and others
5. Track deductions and fringes

This can make running payroll 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 should be. Most general accounting software is only designed to handle the limited transactions of small businesses, not the high-volume transactions that characterize the construction industry.

Even with a small construction company, these general-purpose programs can have you stuck with an undersized, overtaxed database. However, a solid construction-specific accounting system will use an open-system, relational database to give it more power, speed and integrity to grow as the company does.

Improve Your Construction Accounting with FOUNDATION®

As a hard-working contractor, you shouldn’t let these myths hold back the growth of your business. You can overcome your worst challenges with good construction accounting software.

Investing in construction accounting software can revolutionize how you manage finances, projects and overall operations. Construction accounting software that’s specifically designed to address the unique challenges and requirements of the entire construction industry offers a range of benefits.

Construction accounting software guarantees you won’t fall behind by generating accurate reports, tracking expenses, providing a detailed cash flow, offering payroll services and running on an advanced database. With these detailed insights, you can manage more profitable jobs.

Don’t believe the myths, instead invest in construction accounting software like FOUNDATION. We can help your company improve efficiency and accuracy with customizable reporting, document management and automated expense tracking.