Throughout the year, I talk to a lot of construction business owners and accounting staff who are considering a change in their construction accounting software. I’m occasionally asked by companies, particularly those on the proverbial fence, why they should make a switch. However, I like to approach the question a little differently, because while I like when companies choose my software, I want the change to be best for them. Companies should consider the reasons they want to switch—is there a specific reason or are they just going through the motions. Not every company needs to change their construction software, but there are some definite reasons to switch, and here are my top three.
Accurate Job Cost Budgeting, Forecasting, and Tracking
Without jobs, a construction company wouldn’t be in business, so it’s vital that the financials of those jobs are tightly managed. It makes sense then that your construction accounting software help you track costs. But your software shouldn’t just keep cost records—it should give you the information you need to effectively budget, manage, and forecast all of your jobs’ costs.
Budget: Even the most basic accounting software applications will claim to assist with job costing. However, that doesn’t necessarily mean it’s suitable for construction and built with the ability to quickly build budgets, forecasts, and track the accuracy of those forecasts. When considering the ease at which you can do these things, look at whether or not your software allows you to import estimates and pre-populate a job’s budget with those estimates. This is powerful (and time saving) functionality, so if you don’t have it now and you’re growing, you’re going to want to get it.
Forecast & Track: Budgeting is just one component in operating the machine that is a construction business. Tracking and forecasting play equally important rolls, and all three have to work together. Budgets have to be carefully tracked, managed and adjusted throughout, so your construction software should easily provide you and your project managers with the cost to complete data necessary to create those adjustments, or forecasts. Having the data is a starting point, but it’s necessary for the data to be accurate and timely. If your software doesn’t reflect changes and updates in the field because the data needs to be input into the software at the office, you should consider making a switch. Without the most accurate data, making accurate projections is nearly impossible.
The more complex your business becomes, the more information is needed to make all three of these components work together effectively. If any one area is lacking, you risk job profitability and ultimately, company success. Enterprise software is designed so that every application within it works together, not as a separate component. If any one of these areas is lacking, you may want to consider new software.
Information and Document Management
This is an area that many would probably consider more of a project management or operations problem, not an accounting one, but times are changing and so is the information necessary to run a construction business. Many companies are going paperless, which means fewer filing cabinets in the office. Finding those electronic documents should be just as easy as opening a filing cabinet, though. While project managers and field workers rely on the latest documents for job updates and changes, office staff rely on many of the same documents to justify expenses and manage overall job profitability.
It makes sense, then, that your construction accounting software not only handle job costing, but document and data management as well.
Many basic construction software applications have document storage abilities, but they don’t necessarily link project documents together. This means that all of the documents for a job and related correspondence are filed and linked to the appropriate job. Without this functionality, your project managers and accounting staff could spend more time hunting for data than doing something with it.
The Latest Technology
Technology seems like an obvious point, but bears some consideration. Most software is obsolete relatively quickly. This point is particularly important as the way we receive and consume information changes and becomes more mobile. If your software runs in a Windows environment, that is, it’s loaded onto a piece of hardware, your software has limited life left. In turn, the days of software vendors that don’t make the shift to cloud-computing and mobile technologies are also numbered. If you’re deciding whether or not to make a change, consider if your current vendor has a plan to adopt the latest in technology by providing true cloud-based construction accounting software. If not, you should consider switching before you’re behind the curve along with your vendor.
There are numerous other reasons to consider a switch in accounting software, but these are what I feel are some of the most important aspects to consider.
What do you think is the most important consideration when deciding whether or not to change software applications?