16 benefits of using construction accounting software
The difference between construction management software and project management software is often talked about. However, construction accounting software is just as important, if not more.
This specialized accounting software provides many financial management tools to track costs and finances as projects progress. It includes job costing, payroll, accounts payable and receivable, general ledger, cash management, financial reporting, and audits.
Here are the benefits of construction accounting software.
Benefit #1: Improve project efficiency
Without modern accounting software, construction projects often lack efficiency. Accounting software for construction can help catch or fix expensive overruns and other financial issues, ensuring everything runs smoothly.
Benefit #2: Better data management
Construction projects generate financial data. Contractors, subcontractors, suppliers, banks, and customers provide information. It’s quite a bit to handle. Construction accounting software helps you track, receive, and store this data. This prevents incorrect invoices, missed deadlines, and cash flow issues.
Benefit #3: Manage the project budget
You might know the project’s cost. Without enough oversight, contractors overspend. Accounting software helps a construction company track its budget quickly, ensuring money gets to the right areas.
Benefit #4: Forecast future expenses
As you adapt your budget, you should run analyses and forecasts. With construction accounting software, you can do exactly this. Enhance financial controls, test different project outcomes, and valuate what you can realistically do under budget.
Benefit #5: Monitor revenues & track time
Revenues are recorded in your accounting software as clients pay. This keeps your finances accurate and helps assess contract profitability. Revenue can be matched with expenses. In addition, you can track time for contractors. Make sure their pay and earnings match their work hours. If needed, automatically add these times to their invoices.
Benefit #6: Construction accounting software is specialized
You can use regular accounting software for bookkeeping, but it suits small businesses, not construction contractors. Construction accounting software is made just for this industry, so it has more features and benefits tailored to construction needs.
Benefit #7: Versatility in deployment
Construction accounting software likely offers several deployment options, such as desktop software, cloud-based applications, and mobile apps. These let you track and manage time and expenses at your own pace.
Benefit #8: Integrate with project management software
You can often link construction accounting software to project management software. This way, you can handle one or more projects using the same software.
Benefit #9: Accurate and reliable data
Construction accounting software ensures strong data quality. You don’t need to worry about data consistency and accuracy. Information is always up-to-date, allowing you to share, analyze, report, or store it for the future.
Benefit #10: Regulatory compliance
The construction industry must follow many regulations. The software can help you avoid accounting mistakes and penalties. It also gives you peace of mind by ensuring your finances are in order.
Benefit #11: Track costs in real-time
Keep track of project costs in real time. This is a crucial accounting feature. It helps you monitor profitability and see where costs must be cut or controlled to stay within your expected margins.
Benefit #12: Identify unexpected costs
You can also track indirect costs like overhead and administration as you track materials, labour, and subcontractor expenses. Unexpected costs might arise in any of these areas, and accounting software helps you see when, where, and how they happen.
Benefit #13: Transparency for clients
With job costing and expense tracking, all of this data can easily be compiled into reports or shared with clients and stakeholders as needed. It creates clear transparency for clients.
Benefit #14: Author work-in-progress reports
Construction accounting software can create hundreds of reports and automate them. You don’t need to switch between spreadsheets or databases. All the data stays in the software, is easy to access, and can be changed into report format.
Benefit #15: Create and issue invoices
Easily bill and invoice your clients. You can automate your invoicing and track payments as they arrive. Customize your invoice schedule based on your project’s phases or stages. You can also choose how much work to include, whether billed hourly or lump sum.
Benefit #16: Improve communication
When you send out these invoices and reports, it helps improve communication among stakeholders by giving them better access to information. This leads to more collaboration, quicker decisions, and higher profits.
