Jul 11 New Standards Call for an Assessment of Construction Software
The construction industry is one of the riskiest industries to operate within. One bad job, a missed bid, or a possible downturn in the economy can severely affect a contractor’s business and resonate for years after. You can also say the construction industry is unique given the constant demand for real-time data, cash flow emphasis, specific required reporting, and an accounting method based on estimates.
Contractors need to take into account the upcoming implementation of the new Revenue Recognition Standard* which will establish new principles on financial reporting, including the uncertainty of revenue from contracts with customers. For contractors, it is now more important than ever to have proper accounting software in place to increase productivity and efficiency, and ensure appropriate and accurate reporting of financial data.
The consideration of new construction accounting software can be daunting. Deciding to make the switch is tough enough, but choosing the right software requires appropriate due diligence and a significant time investment. When making this decision, there are a few key points to keep in mind:
- Complexity of Your Business. Not all software is suitable for every contractor. More specifically: union or non-union, multi-state operations, type of work performed, number of jobs performed, etc. Take care to identify your daily needs and top priority items to ensure your software will perform the way your business needs it to perform.
- Real-Time Access. The construction industry hinges on live, real-time data, and many of the more sophisticated software platforms can be accessed remotely by the accounting staff and employees in the field. Providing Supervisors and Project Managers with the capability to view and input real-time data from the job site helps to provide more timely and accurate information for analysis and job status updates.
- Add-ons Add Value. To address all of your business’s moving parts, you need software that can operate with your company as a whole. Having software that offers additional modules or incorporates other separate software are key considerations. Specifically: document management, payroll, estimating, scheduling and automated invoice processing
- Quality First. Price is typically at the top of any contractor’s list for considerations, but having the right software in place is too significant to discard options based solely on price. The cost can fluctuate drastically when you factor in other variables such as training, transition, number of users, modules, and customization. It is important to weigh all aspects when honing in on the deciding factors. A pricier option now may save you in the future. As you know from construction, you get what you pay for
- Consult With Your Accountant. While many of the construction accounting software options may meet your daily needs for job tracking purposes, don’t forget the accountant’s standpoint and reports needed for the financial statements, banking, and bonding. Be sure to keep your accounting team in the loop with your decision making process as they can provide valuable insight.
Sax has extensive experience with many of the popular construction accounting software options and can offer insight on the use and transition. If you are considering a software change, or even just evaluating the capabilities of your current software, keep the above key concepts in mind and contact your Sax advisor for assistance and insight on the transition and options available.
*The new Revenue Recognition Standard is effective in annual reporting periods beginning after December 15, 2017 for public companies and annual reporting periods beginning after December 15, 2018 for private companies.