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CIF Corporate Partner, Integrity Software, writes about recognising the weaknesses in your existing accounting software system and what to do about it
Accounting software plays a vital role in the operation and financial management of your construction business. Despite the advancements in technology, many construction companies still face challenges and shortcomings when it comes to their accounting software. Here we will explore five common ways in which construction businesses’ accounting software fails them and how these can impact the businesses overall financial health.
- Lack of Industry-Specific Features
One of the main issues with generic accounting software is the lack of industry-specific features, tailored to the unique needs of your business. Construction companies have specific requirements, such as managing multiple projects simultaneously, tracking project costs, handling orders, and maintaining billing. Without these specialised construction accounting features businesses often struggle to accurately track their financial status and maintain a comprehensive overview of their projects.
- Inadequate Job Costing Capabilities
Job costing is a foundational aspect of construction accounting, allowing businesses to track costs associated with individual projects or jobs. Many accounting software solutions still lack robust job costing capabilities and resort to using spreadsheets to track their job costs. Using spreadsheets instead of an industry specific software leave your business susceptible to loss or corruption through human error and outdated information due to saving in multiple different locations. Without accurate job costing, construction companies will likely find it challenging to assess project profitability, identify cost overruns, or make informed decisions for future projects.
- Poor Integration with Project Management Tools
Efficient project management is the key for successful construction companies, so seamless integration between accounting software and project management tools is crucial. Unfortunately, many software options lack proper integration capabilities, leading to manual data entry, more work, and potential errors. This disconnect between accounting and management hinders productivity, hampers efficiency, and can result in costly delays.
- Limited Document Management and Collaboration
Effective document management and collaboration are crucial for construction companies to maintain accurate records, share information, and streamline communication with stakeholders. However, many accounting software solutions lack robust document management capabilities, making it difficult to store, organise, and retrieve project-related documents such as invoices, GRN’s and health and safety reports. This makes it harder for collaboration between different departments, project managers, accountants, and subcontractors, leading to inefficiencies and potential miscommunication.
- Inadequate Reporting and Analytics
Meaningful reporting and analytics are essential for construction businesses to assess their performance, make informed decisions, and identify areas for improvement. However, generic accounting software often falls short in providing comprehensive reporting and analytics specific to the construction industry. Construction companies require reports that highlight project-specific profitability, cash flow, and budget vs. actual comparisons. The lack of such features limits their ability to gain valuable insights and proactively manage their finances.
While your accounting software may have simplified various aspects of financial management for your construction business, it is crucial to recognise its limitations. The failure of poor accounting software to address industry-specific needs such as job costing, integration with project management tools, document management, and analytics can hinder the financial health and success of construction businesses.
To overcome these shortcomings, you should consider investing in specialised construction accounting software or a fully integrated construction management solution such as Evolution Mx. This industry-specific software offer tailored features, seamless integration, and robust reporting capabilities; enabling construction businesses to streamline their operations, enhance project profitability, and maintain a solid financial foundation.
If after reading you would like to find out more about how changing to an industry-specific software can help you, contact Integrity Software.