7 Reasons to Switch to Construction Accounting Software

Construction accounting software is a powerful tool for managing finances in the construction industry. It provides specialized features and functionalities that help contractors and builders to streamline their accounting processes, improve accuracy and efficiency and save time and money.

Why is Construction Accounting Software Important?

A generic accounting or bookkeeping solution is an application designed for small businesses to keep track of their finances. Most general ledger systems, such as Quickbooks®, offer basic functions related to managing monthly income and expenses.

In contrast, construction-specific accounting software, like Deltek ComputerEase, includes these same features but adds more features tailored to the needs of construction businesses. Additionally, construction-specific modules within financial software also include project accounting, job costing, construction payroll and specialized progress billing.

7 Reasons to Switch to Construction Accounting Software

Here are some top reasons you should switch from a generic solution to construction accounting software.

1. Your company has outgrown your current accounting system
   As a construction company grows, it is likely to undertake more jobs, hire more employees and expand its operations. This increase in business activities can make it difficult for a basic accounting system to keep up. Once a construction business expands, more complex financial reports are typically needed for various stakeholders such as shareholders, lenders and regulatory bodies. Construction accounting software can provide more detailed reports and insights into financial performance than a basic accounting system.
2. Your current vendor no longer meets your business needs
   Current vendors may no longer be the right fit for your business for a multitude of reasons. Sometimes the quality of customer service may not be sufficient, or the cost has increased so much that it is no longer worthwhile. Other times, your business needs may be changing, and your current vendor can no longer support your needs. Your software provider may not have kept up with advances in technology, resulting in limited functionality and outdated features. It’s also important to know if your vendor’s security measures are up to par. If not, it can pose a risk to the organization's sensitive data and increase the likelihood of cyberattacks. Lastly, if your current vendor does not integrate well with other software systems used by the organization it can result in data inconsistencies and decreased efficiency.
3. You have poor visibility into your construction business
   Complete visibility into your construction business is essential for managing your financial, operational and strategic aspects effectively. Construction accounting software has features like job costing and Work in Progress (WIP), allowing you to track the progress of your projects, manage subcontractors, identify potential issues and risks before it’s too late, understand your cash flow and efficiently manage your resources. You can better understand your jobs individually and the company’s performance as a whole. These features—which use real-time data—help you make informed decisions and ensure profitability on all jobs.
4. Your current system can’t keep up with government regulations
   Working with the government requires a lot of compliance. These requirements, especially within the Davis-Bacon Act, can become complicated and time-consuming. If your current software can't keep up with its many regulations, it can lead to serious consequences such as delays, fines, legal actions and even project shutdowns. To avoid these consequences, it is essential to implement software for contractors that can meet all relevant government regulations.
5. Your users are working around the system
   If your users are not using your software the way it was intended to be used, this is a problem. Users tend to work around a system, like creating separate spreadsheets, if it is not user-friendly. However, working around a system can be bad for several reasons. First, if they are not following the prescribed workflows or data entry methods, it can result in errors, inconsistencies and data integrity issues, leading to inaccurate reports, decision making and loss of credibility. Second, working around approved software may involve using unapproved methods, tools or devices, which can introduce security risks to the organization. This can compromise sensitive data, create vulnerabilities and increase the likelihood of cyberattacks. Lastly, when users work around software, they may encounter issues or errors that are not supported by the software vendor. This can lead to frustration, decreased productivity and increased IT support costs.
6. Your payroll is unmanageable
   Construction payroll is unique and brings complexities that most other industries do not have to worry about, such as prevailing wage, union payroll and multi-state/multi-city requirements. Payroll laws frequently change, which can cause confusion and lead to mistakes. Inaccurate payroll can also be detrimental to your business, eroding employee trust and potentially creating problems with unions. Using a dedicated construction payroll service, whether it is within your construction accounting software or a third-party vendor, is the best way to stay on top of your construction payroll, ensure you are compliant and reduce the likelihood of mistakes. These services can reduce the burden for the following construction payroll complexities.
7. You can’t access your data on the job
   Accessing your data from anywhere, especially on a job, is crucial for contractors. Using real-time data, you can track your progress while on the job site, allow your workforce to submit time and field logs, record field expenses and view key employment details. You can also approve invoices, request materials, complete service work and review key reports whenever, wherever—with ease. Without this capability, your firm may have constant miscommunication and disconnect between the field and the office.

If you are looking for a purpose-built solution to create invoices, run jobs and perform other functions related to your construction business, you should consider an accounting system built specifically for the construction industry, such as Deltek ComputerEase.