CONSTRUCTION Accounting ARTICLE -
Do You Know Where Your Money Goes? -Job Costing Software Can Help

Target Audience: Construction Industry Professionals, Contractor Business Appraisal, Job Costing, Spending Planners, Project Managers, Contractors, Construction Accountants

When it comes to the money you spend and make on a project, what you don’t know can hurt you. If you’re still using spreadsheets to track job costing, you’re not only losing out on a valuable opportunity to understand where your funds are going — you may be losing money, too.

An upgrade to job costing software could provide you with the details needed to streamline your spending and control your costs. In addition, software purchases may be eligible for bonus depreciation treatment; be sure to discuss this with your construction financial advisor.

Reaping The Benefits

Depending on the software package, job costing software can give you the power to track spending, execute change orders and create reports that provide detailed information on any payment exchanged over the course of a project. Most products can also handle accounts payable, accounts receivable, payroll and general ledger functions. Additional modules can be added if necessary.

Typical job costing software provides a cost breakdown of every job, giving you the opportunity to save money and increase profitability by making changes for future projects. It can also help you create a detailed budget before a project starts, which can then be compared to final costs. And with job costing software in place, you can identify budget problems and sources of lost income (such as materials or labor) midproject and adjust accordingly.

Ultimately, a more streamlined job costing process can speed work time, allowing you to take on more clients and projects. Plus, job costing software provides a more efficient way to maintain quality data and accurate financial records, which is vital when it comes to meeting industry accountability standards and disclosure requirements. You’ll also be upgrading your internal controls and capacity to prevent fraud.

Finding The Right Solution

To get started acquiring a job costing solution, send out a detailed request for proposal (RFP) to several suitable vendors. Include a brief description of your construction business and a general range of its annual revenues as well as a list of functions you’d like to have, such as purchase order or inventory modules.

If you sense that a particular vendor is out of touch with your technological needs, move on to another provider — even if that first vendor offers a remarkably low price. Expect to pay anywhere from $3,000 to $30,000 for a solution, depending on its capabilities.

Approach the purchasing process carefully, with a general idea of how much you’d like to spend. There are dangers to buying a job costing system — namely that you’ll overpay for a solution that you and your employees aren’t fully prepared to use, or that you’ll underpay for a system that does you little to no good.

Recognizing The Need

If, during the course of a project, you’re unable to identify job costs and you’re struggling to forecast a project’s financial future, implementing job costing software is something to consider. As mentioned, however, it’s a decision that you need to approach carefully, with an eye toward getting the most value for your money.

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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