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What Features to Look for in Construction Accounting Software

What Features to Look for in Construction Accounting Software

Due to the project-based nature of the construction industry, construction accounting can be uniquely complex, with challenges like managing project-specific budgets and tracking variable costs. To overcome these obstacles, construction companies should utilize software tailored to the industry that can help deliver real-time insights, automate financial processes and assist with regulatory compliance. Beyond these benefits, choosing the right accounting software will allow businesses to stay competitive and operate more efficiently.

What are Key Features to Look for in Construction Accounting Software?

Not all accounting software systems are created equal. Understanding which features deliver the most value is essential when choosing the right software. To streamline operational performance, construction accounting software should include these key features:

  • Job Costing and Work-in-Progress (WIP) Tracking – The software should enable contractors to track the costs for specific tasks and phases throughout each project. It should also generate real-time revenue recognition reports.
  • Payroll and Compliance Management – Construction payroll software should support multi-rate, multi-location processing and develop certified payroll reports for government projects. It should also include features for union wage tracking and multi-state payroll tax compliance for contractors working across different jurisdictions.
  • Billing Automation – Effective software should support automated invoicing, retainage tracking, progress billing and time and materials billing.
  • Financial Reporting – The software should have the ability to generate real-time financial reports to help improve budgeting.
  • Integration with Project Management Systems – Integrating accounting software with project management systems creates a seamless union with accounting and operations teams, enabling them to work with the same data such as procurement, scheduling and field reporting tools.
  • Cash Flow and Expense Management – The accounting system should provide tools to monitor cash flow, track outstanding payments and capture expenses including subcontractor costs, equipment uses and material purchases.

Overall, the accounting software that a construction company adopts should save time, bring financial clarity, simplify tracking costs across projects and reduce errors.

Planning for Success with Accounting Software

If a construction company feels as though its accounting software doesn’t have the necessary features it needs to succeed, it might be time to consider implementing a new system. However, in order to strategically implement a new software, we would recommend a company:

  • Align all levels of leadership so everyone is on the same page about the need to transition, as well as the objectives.
  • Assemble a change management team for a smooth transition.
  • Establish and track key performance indicators (KPIs) to gauge the success of the implementation and ensure the project remains on track.
  • Develop a realistic timeline with built-in flexibility to allow for unforeseen challenges.
  • Collaborate with a vendor to create a training program tailored to the company’s needs and goals.
  • Gain an understanding of all integration capabilities, including specific data flows between systems, what the systems are involved and the frequency of data synchronization. Including the company’s Information Technology (IT) team during the implementation process is also essential to evaluating the software.

With the right strategies in place, construction companies should be able to navigate the transition to new accounting software with minimal disruption. Once implemented, a new accounting system will allow a company to strengthen its financial system for years to come.

If you have questions regarding accounting in the construction industry, please contact a Brown Plus Advisor.

Posted In: Construction | Insights

About the Author - Brian Rosenberg, CPA, MBA

Brian is an Audit Principal and Shareholder at Brown Plus and serves as Chair of the Firm’s Accounting and Auditing Committee.

Brian has over 25 years of public accounting experience and specializes in providing accounting and auditing services to companies in a variety of industries, including construction, manufacturers and distributors, real estate, professional services and other for-profit industries. His responsibilities include planning, performing and supervising audits, reviews and compilations, and presenting results to owners and audit committees. He additionally provides tax services to his corporate and individual clients.

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