CONSTRUCTION Accounting ARTICLE -
Track Your Tools: Technology Can Help You Stop the Nickel-And-Diming

Target Audience: Construction Industry Professionals, General Contractors, Construction Accountants

In an economy where cash flow is more important than ever and operational efficiency is critical, it can be easy to lose track of the little things. Literally. Losses of small tools, whether to carelessness or outright theft, can slowly but surely nickel-and-dime you into a disadvantageous financial position. Fortunately, technology offers a variety of tools for coping with this problem.

Bar-code systems

Think of tools as miniature assets that can be coded and tracked just as easily as a 17,000-pound backhoe. For example, electronic bar-code systems easily and efficiently label, coordinate, trace and catalog tools in real time. These systems usually involve, as you may have guessed, bar codes displayed on polyurethane labels on each tool. These labels are designed to hold up under repeated on-the-job wear and tear.

The systems also come with hand scanners, which project or equipment managers use to scan the bar codes when assigning tools and accepting returns. Tracking software sends the pertinent information to a database that you can also use for browsing, billing and running reports. In addition, the program records repair histories and maintenance schedules.

The cost of bar-code technology varies, depending on the number of features included in a given system configuration. How complex a system you’ll need will, of course, depend on the number of tools you’re looking to track as well as the number of job sites you typically maintain.

Reduced budget and liability risks

This technology also improves management efficiency. How? You can let managers know that, if the system doesn’t show tools as coming back from job sites at completion, you’ll charge the project for them. Thus, managers will more closely monitor and protect these items to avoid going overbudget.

Bar-code technology may also reduce your legal liability. Federal regulations often require workers to wear safety gear such as goggles, hard hats and respirators. And these systems enable you to show that you issued employees the proper equipment, which could in turn limit your accident liability.

Accounting integration

To take a tool-tracking system to the next level, integrate it into your accounting system. Doing so can boost the value of your tool-related data and streamline procurement of these assets.

For instance, you might create a “live” (constantly updated) list of tool information, such as descriptions, warranties, purchase dates, costs and maintenance schedules. You can then generate a report of employees or job sites responsible for each of the small tools on the list.

An integrated system may also enable you to assign tools by employee name, job code, project number, date, time, location or other criteria. This can give you some valuable insights into how that tool is being used and prevent it from being left lying around unused on a job site.

In turn, you’ll foster an atmosphere of accountability by making managers and employees more responsible for these assets. There’s no better way to drive home a point about wasted assets or money than to sit down with employees and show them, in dollars and cents, how a tool is being misused.

More for you

If you’re already using some type of tool-tracking software, but you’re still struggling to track and leverage the use of these small assets, it’s probably time for an upgrade. At the very least, undertake an intensive review of the system and its use to see what’s going wrong.

And if you’re still managing your tools the old-fashioned way, whether through paper checklists or the honor system, now is likely a good time to step up to a higher level of tool management. Although you’ll need to invest some time and money upfront in choosing and implementing the right software — and training your staff on how to use it — the end result will probably be more nickels, dimes and dollars for you.

Find out how our expertise in construction accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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