When is the Right Time to Invest in Construction Software?

time to invest in construction softwareLet’s face it. Replacing your accounting software isn’t a project that most people look forward to. That’s why it’s easy for some companies to kick the can down the road and put it off for a while, even when they know that a change might do them good.

After all, basic software like QuickBooks can go a long way, taking your company from its infancy to a $1 million+ operation. But eventually, the demands of managing more payroll, more costs, more estimates, and bigger projects can bring off-the-shelf accounting software – and your business – to its knees.

In this article, we’ll take a quick look at some common symptoms of construction companies that have hit the tipping point and realize that it’s time to invest in software that’s made for the construction industry.

Job Cost Tracking is Difficult and Unreliable

One of the biggest challenges with basic accounting software is that job cost tracking often happens outside the system. Whether you use spreadsheets or some other method, tracking job costs requires manual effort and tireless discipline.

When job cost tracking isn’t built into your accounting system and integrated with your regular workflow, it’s easy to get off track and not know whether you even made any money on a project until it’s way too late to do anything about it.

With most construction accounting software packages, you get detailed cost breakdowns for each job and for each component of the job.

See Also: Resource Center for QuickBooks Customers

Change Orders Are Lost or Unaccounted For

With most “regular” accounting software, there’s no easy way to track change orders. Just like job costs, change orders are often managed outside the system which opens up plenty of opportunity for mistakes and lost profit.

Whether you missed getting a required approval or if a hand-written change order was lost completely, each misstep opens up the risk that you won’t get paid for the extra work.

Too many contractors lose money on change orders because their software doesn’t systematically track costs and bill for the change work they perform. Ironically, change orders can be an excellent source of additional profit because you have no competition for the work.

Any good construction accounting software package allows you to record changes in the field, turn those changes into work orders, and obtain signoff on approved work right then and there.

Processing Payroll is Time-Consuming and Complicated

Of course software like QuickBooks handles basic payroll. But when you have to deal with more complex issues such as union wages, different taxes when you cross state lines, and certified payroll records, you’ll end up spending MUCH more time processing payroll and reconciling data.

Software that’s built for the construction industry offers payroll features that track hours, ethnicity, social security numbers, work type, fringe benefits, and everything else you need to comply with state, local, and union payroll requirements that are common in the construction industry.

Reports Are Only Somewhat Useful

Basic accounting software is going to produce basic reports. Things like customers, vendors, income, and expenses are important. But they won’t necessarily help you make strategic decisions about projects and job costs that are going to drive profitability and grow your business.

On the other hand with construction-specific software, detailed reports on projects, job costs, work in progress, billings, labor, and daily field reports provide the visibility and insight needed to manage your business the right way. These modern systems also feature technology like business intelligence reporting that has become a very important tool for construction companies that need to make quick and critical decisions on the fly.

Is It Time for a Change?

The answer is different for each construction firm or contractor. It depends on how much time you rack up each month trying to piece together hand-written notes and spreadsheets that are being used to shore up the shortcomings of your current software. There’s also value in the peace of mind that comes from knowing that your reports and numbers are accurate, up to date, and reliable.

When companies get to a certain size, they’re almost certainly losing change orders, underestimating jobs, mismanaging projects, and leaving profit on the table because their software isn’t designed to handle the unique demands of a construction business.

The question is, have you reached that tipping point?

Compare Side by Side

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