Business

Paid in Full

A good expense-management process benefits everyone—including crews, accounting, management and ownership.
By Brian Maslen
August 4, 2022
Topics
Business

For construction companies, quickly processing employee-initiated expenses is critical to moving jobs forward. These expenses are the lifeblood required to keep projects on track—ensuring trucks and equipment are fueled, funding runs to the hardware store, ordering supplies and paying for everything from postage to deliveries, parking and lunches for the crew. All of these expenses, and thousands more each month, must be properly accounted for to ensure that budgets stay on track and profits are fully realized.

Expense management is crucial to construction business owners, because it touches virtually every aspect of a company. How you pay for purchases and manage those expenses affects your employees and customers, and can make or break your business metrics.

In today’s economy, with rising costs of goods and transportation, labor shortages and supply-chain disruptions, managing cash flow and profit margins requires precise accounting. When the expense-management process runs smoothly, crews can keep jobs moving, the accounting team can bill customers promptly and close the books on time, and management teams have the right data to manage budgets and bid future jobs.

Here is a three-step approach to improve expense management at all levels, from work crews to accounting teams, management and business owners:

1. SET THE FOUNDATION

Can’t Manage What You Can’t See

Construction companies must have visibility into what is being spent in order to control and manage it. The process has to be easy and streamlined, so crew members can quickly submit expenses and stay focused on their jobs. One of the biggest hurdles to properly managing expenses is the lag time between the accrual of expenses and spend actuals. This makes it difficult for construction companies to maintain visibility into whether projects are on track or over budget.

For full visibility, expenses should flow into an expense-management system as they happen. Having an integrated credit card and expense solution is a failsafe way to ensure accuracy and automate the process. This allows finance teams and project managers to see spending in real time, without waiting for expense reports at month end, and makes the expense process less onerous and time-consuming for employees. Corporate credit cards also relieve employees from the financial burden of fronting the cash for expenses.

Expense Management On the Go

The last thing workers want to do after a long day on the job is swing by the office with a packet of receipts or sit in a hotel room filling out an expense report. Integrated mobile solutions allow employees to quickly and easily manage their expenses on the road or on the jobsite, giving accounting and management teams accurate real-time visibility to ensure budgets are on track.

2. DEVELOP A PROCESS

Information That’s Important

Construction companies use a variety of metrics to review their expenses, whether by project, job phase, client name, cost code, vehicle code and more. These metrics help with job costing, customer billing, equipment maintenance and other critical tasks. Making sure these categories are accurately accounted for requires capturing relevant details at the time of purchase. It also requires the ability to consolidate expense data into a general ledger at the category level for detailed analysis.

This allows accounting teams to pull in cost centers, expense types and codes from the general ledger, so they can export expenses quickly and easily to close the books. This in turn speeds up billing and reporting. To minimize unnecessary work, construction companies can leverage expense software that integrates with their general ledger.

Customized Administration and Controls

A solution with flexible card administration and controls can make it easier for companies to issue new cards or close out a user, change credit limits, block merchants or lock or replace missing cards. Some card solutions can offer additional spend controls such as limiting a card to gas purchases only. Since every company has different needs, a card with flexible and customizable controls can help ease administrative burdens vs. a one-size-fits-all solution.

3. PUT THE PROCESS TO WORK

Mining Data for Insights

Operationalizing data across the company allows business leaders to manage customers, costs and profit margins, as well as sales to estimate bids accurately. Construction companies can fully leverage the data to glean insights and trends—reviewing expenses across different dimensions, including custom fields like vehicle or cost code, and at different levels of depth, from top-line to drilled-down detail. Ultimately, this data can empower more informed business decisions.

Automated Review and Audit

Accounting teams often spend hours each month manually reviewing expenses, transaction by transaction, to ensure they are within policy and coded correctly. Expense software can be employed to automate this process and should be able to identify which expenses are in policy and which need human review. Ideal software solutions incorporate artificial intelligence/machine learning and learn when miscoded expenses occur, making the process even more accurate.

From bidding to purchasing to billing, many construction companies still process a huge amount of paper, in turn slowing down the ability to make timely, well-informed business decisions. It’s difficult to tie expenses, receipts and purchase orders back to hundreds of jobs, often with multiple phase codes. An integrated corporate credit card and expense-management solution can streamline this process. The crew can assign a job code to each expense at the time of purchase instead of waiting until next month’s expense report, when the details may have been forgotten. Embedding cost-coding into the expense process also improves data accuracy.

An intelligent and connected expense management process doesn’t just make life easier for construction crews on the road as well as accounting teams, it can improve your bottom line.

Brian Maslen is corporate controller for Center. For more information, visit getcenter.com.
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by Brian Maslen

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