How to Select Construction Accounting Software for Your Company

Before selecting a construction accounting solution for your company, it’s important to research your choices and evaluate your company’s needs.

By understanding what key features are ‘must-haves’ as well as what functionalities you’d like for the future, you can avoid the wrong fit and invest in a product that’ll grow with your construction business.

With that in mind, below are some things you should consider before selecting construction accounting software.

Key Takeaways

• Before researching construction accounting software, determine your business’s needs and identify must-have features.
• Construction accounting software can simplify compliance tracking for certified payroll and union reporting.
• Contractors can leverage construction accounting software to track actual costs versus estimates on construction projects.
• WIP reports can be automated using construction accounting software to determine key performance indicators.
• With construction accounting software, you receive real-time data that can help you improve your cash flow management.
• Research construction accounting software based on their add-on modules and integration capabilities to ensure you build an effective tech stack.

Identifying Business Needs

Your company’s needs are unique. The software you may benefit from may be different from other construction companies, so it’s important to identify and review elements of your business, such as:

• The size of your company
• The types of projects you plan to take on
• Your current processes for tracking and submitting payroll compliance items to regulatory agencies
• How you leverage financial data in your operations

You should factor in these considerations as you project your company’s goals over the next five to 10 years.

Keep in mind your company’s goals for growth and make sure the construction accounting software can accommodate it by adjusting scale with your company.

Now that you’ve identified your wants and needs, here are some must-have features you should keep in mind to address them:

Certified Payroll and Union Reporting

Contractors who work on government jobs or employ union workers must follow specific payroll requirements, such as certified payroll and union reporting.

These reports are expected at specific frequencies, and if not filed correctly, the construction company could receive penalties and fines.

Investing in construction accounting software that can automate compliance tracking helps contractors complete these accounting processes faster and with less errors.

Job Costing

If a contractor has determined they want more detailed information about project costs, construction accounting software with job costing features can help.

Contractors need accurate job cost tracking so they can compare them to their estimates and past performance on other jobs.

This gives construction professionals the ability to make more well-informed decisions and address concerns before they become costly mistakes.

WIP Reports

Contractors who take on multiple projects should consider industry-specific construction accounting software with support for work-in-progress (WIP) reports.

WIP reports provide key performance indicators like:

• Gross profit
• Profit margin percentage
• Cash flow
• Retainage
• Pending change orders

WIP reports serve as an important resource for project managers to ensure project needs are being met.

Additionally, WIP reports are oftentimes required by bonding agencies to determine profit margins and risks.

Automating the WIP report process gives you more accurate information by pulling relevant data from within the construction software into your WIP reports.

Cash Flow Management

Contractors who are looking to enhance their visibility into costs and revenue to avoid oversights may benefit from construction accounting software with cash flow management.

Construction accounting software with integrated job costing capabilities provides real-time data so you can manage cash flow to:

• Maximize profits
• Avoid delays
• Ensure you’re paid on time
• And More!

Monitoring cash flow with construction accounting software can help you steer clear of potential financial pitfalls by giving you the resources to make the best possible decisions and avoid cash flow issues.

Accounts Receivable

Delayed payments are not uncommon in the construction industry.

However, construction contractors who consistently face delayed payments from their clients may have a harder time accurately projecting cash flow.

Contractors can avoid these delays with a construction accounting software that offers accounts receivable processing to build audit trails.

This software solution makes it easy to pinpoint when payments were received and identify outstanding totals.

The Importance of Scalability

Software is a big investment for any company. Selecting a solution that can grow with any business should be a leading factor when considering your options.

The scalability of a construction accounting software involves its ability to integrate with other construction products.

Oftentimes, construction accounting software serves as a base for your tech stack or group of software that seamlessly communicates with each other to modernize your construction operations.

Additionally, some construction accounting software offers add-on modules to enhance their capabilities. These modules may improve:

• Inventory and material management
• Unit price billing
• Project management
• Time tracking
• Equipment tracking
• Resource management
• And more!

It’s important to inquire about each construction accounting software’s add-on modules and integration capabilities so you can make the best long-term decision.

How FOUNDATION® Can Be Your Construction Accounting Software

Before selecting a construction accounting software, it’s important to keep the needs of your construction firm in mind and research your options based on:

• Industry-specific features
• Customer support
• Integration capabilities
• Regular updates
• Your business requirements

Once you’ve identified a few options that address these needs, schedule demonstrations to test the software.

You should schedule multiple demos to compare each software’s capabilities and see how it will help with your financial management.

Before the demo, it’s a good idea to have a list of questions in mind and to note areas you hope to address with the software.

After selecting your construction accounting software, you should perform annual reviews to make sure it’s still meeting your needs.

FOUNDATION offers all this and more within its construction accounting software.

Its users unlock valuable, unique insights with help from accounting modules with support for job costing, payroll, accounts receivable, and more. FOUNDATION can help streamline your financial process with the accounting features you need to improve your business operations.

FOUNDATION has a team of experts ready to answer any questions you may have to see if we’re the right fit for you. Talk with a construction accounting professional today!