Construction company accounting procedures that save you money

One of the biggest problems in business today is people are time poor. Consequently, ineffective processes and incompetent construction company accounting procedures can reduce the daily output.

Does your typical day at the office sound like this?

  • Arrive around 6.45am
  • Sit down with coffee, check calendar and task lists to see what the day holds
  • A sip of the coffee with a vision to review project cost planning and generate some project forecasting in the quiet of the day before the other staff arrive.
  • First of all the phone rings and there is a crisis
  • In addition, the boss then calls and needs other information and it is “Urgent”
  • And then, the project manager calls to say the supplier does not have the Purchase order
  • Interruption after interruption, then go home at 6.00pm

We all know the feeling of constant interruption. Did I hear you sigh as you said: “this is a typical day in my office”?

While there are many areas to address which will minimise stress, we’re going to look at “just one”. Possibly the most important area: Construction company accounting procedures.

So let’s look at how you can be more time effective with construction company accounting procedures:

Ensure you are using construction industry specific fully integrated software

That means using an estimating, job costing, payroll and accounting (including builders retentions) integrated package in lieu of generic accounting software. In doing so every cost against a project is captured in “real” time. Tracking overruns, forecasting and contract management are now all done at the click of a button. No more data manipulation to transfer data to spreadsheets or other packages.

Maintain construction labour and materials data integrity

If you put aside 10 to 30 minutes once a month to review and update if required, the price list imported into the software. A regular commitment of this time keeps your job costing accurate. That means that the job is then right from the original estimate to completion.

Estimating time committed at the beginning is time saved – permanently

The estimator allocates the time to ensure estimate processes and data, are set up correctly. Time devoted to the correct set up means the cost of materials and all other items in the estimate are accurate. Streamlined processes also mean greatly reduced time to quote jobs. And when the job is won the project job costing does not require any data manipulation.

Setting up ledgers, suppliers and subbies at the beginning are time saved – permanently

Correct set up of general ledgers, suppliers and subcontractors are vital. Accounts department, therefore, need to allocate time to the initial set-up. When the set-up is accurate purchase orders, creditor and debtor invoices are simply a click of a button.

In most cases, orders and invoices do not require any additional changes to the data contained within them. Reduced data entry can result in a gain of around 3 hours per day (based on feedback from our customers). The time saved allows staff to work on multiple projects. As an added bonus, all invoices are job cost directly against the project in “real time.   No further need to export and manipulate data.

Setting up payroll right at the start is time saved – permanently

The payroll administrator needs to invest the time to set up the staff in the payroll. When set-up the pay run can be completed in around 1 to 4 hours (based on feedback from our customers). When correctly set up and timesheets have been imported payroll is the click of a button. Furthermore, the “exact cost” of a staff member is now automatically captured in the project job costs. Again, no further need to export and manipulate data.

Return on investment of implementing construction company accounting procedures

Time is money. Fully integrated software, when set up and maintained, streamlines processes from the estimator to the contract administrator to the project manager, and to all staff in between. New construction company accounting procedures are now in place, with minimal disruption to the day to day workflow of each individual.

When using fully integrated software, there are no more “missed” variations.  The dollars are finally in the builder’s pocket!! There will be no more over or under ordering of goods and services for a project.  Data entry is minimal. But the most invaluable benefit is the management team can see in “real” time exactly where the contract is at and exactly where each stage of the job is at.

Customer feedback on time savings

Customers tell us that on average 3 hours per day are saved in data entry. Consequently, this equates to around 720 hours per year. Assume the staff member is costing the company $35.00/ hour, we are now talking over $25,000.00 per annum (based on 48 weeks).

Project Manager time-saving

Project managers save around 3 – 4 hours per week. This is as a result of not having to rummage through invoice paperwork, to make note of what project the order / invoice is for. I would guess the project manager cost to a company is around $45.00/ hour. Do the math and you see the type of savings you get!

Contract Admin time-saving

Contract administrators can save on average 8 hours per month with Job costing and Job forecasting. One day a month not needing to be spent manipulating data to review that month. It’s like driving your car forward while looking in the rear view mirror and is costing the business around $35,000 to $38,000 per annum just in wages. In addition, there are time savings at end of BAS quarter and at EOFY and the cost of “not changing” has increased. Furthermore, add to this variations that “could have been claimed”, materials which “should not have gone missing” and suddenly you have lost the cost of a full-time staff member

As a direct result of using fully integrated software, new construction company accounting procedures are now simplified. Best of all, transparency is now in place, across all areas of the business

The day starts now like this;

Arrive for work around 7am, sit with a coffee and spend 10 – 20 minutes, doing a review of project job costs. Look at forecasting and review any overruns, maybe speaking to the project manager if any discrepancy in the budget to actual is shown on the screen in front of you. Coffee finished and now ready to deal with those other annoying interruptions.  Time management returns once more and with it some sanity.

Go home at 4pm and as a bonus, enjoy lunch!