Accounting and financials for a construction company brings a unique set of skills and demands to the table. Today’s modern contractors have enough to worry about. But the good news is there are some easy solutions to avoid having to add financial stress to that list. Below, you’ll find a couple of tips to take the stress and worry out of those construction-specific accounting challenges.
Job Costing in Real-Time
Today’s construction site is filled with things that cost money. It might be tempting to try and tally all those job costs and expenses once the project is complete, but it’s only going to open you up for error and hassle – and time, lots and lots of time spent. Labor, equipment and supplies all need to be planned for and accurately tracked. But we’re just talking about one job site here. Most construction companies work on multiple projects at the same time.
Best practice for your modern construction company is to require people to record expenses daily. If you wait and figure out job costs and expenses once a project is done, you’ll find it’s inaccurate and way too time-consuming to figure out. Each job needs to have the costs attributed correctly in real-time. Therefore, you’ll want to give your job site crews the ability to clock in and out remotely and report on tools and equipment used. Suddenly your accounting team back at the office has the ability to see exactly what’s happening on each job site each day.
The Reality of Change Orders
In addition to job costing, change orders are an inevitable reality in construction. Complex construction jobs usually mean that changes will have to be made on the fly. Without a formal change order approval process, you’re opening yourself up to customer contract disputes. Setting realistic expectations with the customer before a project has even started, and securing their approval, is the best way to avoid incurring costs that will come out of your profits. We all know how tight those margins already are, so contracts with the prospect of a change order process can avoid taking on that financial risk.
Technology can again save the day for everyone involved in this ever-changing project. Empower both contractors and the accounting team to see change orders in real time. The approval process happens in minutes rather than days and any additional costs associated with the change order get allocated to the correct job immediately. Software tools should be able to give everyone from your customer to your foreman a clear picture of costs, changes and project progress.
If you’re worried about construction projects that depend upon time-consuming manual entry and physical documentation, it’s a perfect time to look at a comprehensive, cloud solution that connects everyone in real-time from anywhere. There are some excellent choices today for modernizing your construction operations. We’ve found that growth-oriented contractors understand the need for seamlessly reporting everything back to the accounting team. Make life so much easier for your accountants and truly everyone company-wide with the help of one connected platform.
As Senior Industry Consultant for Aktion’s Construction & Real Estate Division, Steve assists customers to improve processes, establish best practices, utilize technology, and understand industry trends to position companies for digital transformation. An experienced business executive and software consultant with unparalleled expertise in the Construction industry, Steve is a respected voice in the Construction and technology community.