Home >>
May 2009 >>
Why Now Is the Time to Upgrade Accounting Software
During tough economic times, the trick is to decide where to cut costs and where to spend. Proactive contractors choose to invest in tools that will increase productivity and efficiency and help them compete better in the long term.
Specifically, contractors are investing in sophisticated job cost accounting software for three important reasons.
Time and Resources
New technology can feel like a double-edged sword. When business is booming, contractors usually have little time to research, purchase and implement new applications. And when business is slow, they have less incentive to spend the money.
However, time is money when it comes to accounting software technology. Construction-specific systems can improve not just day-to-day bookkeeping and accounting tasks, but also job cost reporting, financial reporting, equipment management and countless other construction functions. A coordinated effort among everyone—from the owner and project managers to the controller and accountant—is necessary to find and properly implement the best accounting software system.
Despite the advantages, implementing new accounting software initiatives requires time to research, gain feedback from staff members, convert historical data, train employees and go live. Forward-thinking contractors are taking advantage of today’s business slowdown to train their employees thoroughly so they will be better able to compete when the economy rebounds.
Public Works Opportunities and Reporting Requirements
Increased funding for state public works projects is a silver lining in a hyper-competitive market. Whether a contractor has experience with government funded jobs or hopes to enter the public works arena for the first time, construction-specific accounting software is one tool it cannot afford to be without.
The recently passed stimulus package, which promises billions of dollars in infrastructure funding, carries with it the complex reporting requirements associated with all projects funded by the federal government. Prevailing wage requirements and, in particular, the U.S. Department of Labor’s certified payroll requirements, make it difficult for many contractors to compete for these jobs and still make a profit.
Without the ability to instantly track and report employees by job, trade or hour, a company might have to hire two or three full-time employees to keep up with compliance requirements on a public works project.
The ability to set different rate tables for distinct geographical areas and jobs, properly allocate and accrue fringe benefits, and generate certified payroll reporting and other extensive reporting capabilities are just some of the advantages sophisticated construction-specific accounting software systems offer government contractors.
Long-Term Competitive Advantage
By investing in tools that provide information to control job costs and improve profits, contractors position their companies to not only weather the current conditions, but also to emerge from the downturn even stronger.
Construction-specific applications provide numerous competitive advantages compared to generic or outdated software. From a job costing standpoint, integrated systems provide contractors with reporting flexibility and unlimited access to timely and accurate job data—from the big picture down to the smallest detail. From a financial reporting standpoint, contractors can feel confident that all reports, including over/under-billings, overhead allocation and cash flow by job, are accurate and instantly accessible.
Not only does this help contractors during taxes and audits, but it also ensures they have the bulletproof reporting needed to acquire bank loans and surety bonds in a tightening credit market. Date-sensitive systems allow contractors to pull detailed job data from any time period, even years after closing the books. This information is critical for preparing accurate bids and budgets, which leads to greater profit potential.
No one knows how long the current slowdown will last, but experts agree on two things: The U.S. economy will rebound, and construction is key to that recovery. The real question is: What will construction companies look like when the dust settles?
Contractors that invest now in sophisticated construction accounting software are sure to benefit from improved job cost reporting and financial management capabilities, not to mention timesaving efficiencies. But more importantly, these contractors are likely to emerge stronger and leaner than competitors that chose caution over innovation.
![]()
Friday, September 3, 2010