06th February 2014
Job costing: where your accounting system is letting you down
Job costing is necessary in order for your company to ensure it always makes a profit. Does your generic software enable you to view the necessary information with ease?
In order for your construction business to grow, you need to know which jobs are worth taking on and which are best avoided, so it is vital that you are able to carry out job costing processes quickly and efficiently in order to make the right decisions. Job costing involves calculating the costs involved in a construction job and tracking them against budgets set to gain an idea of just how profitable the job is, which can be a time-consuming and complex task. Without construction accounting software, account managers are left to calculate the costs of a job manually or by using a limited generic accounts system, the result of which can often lack accuracy and cannot always be relied upon. We spent some time comparing manual processes using generic software to automated processes using construction software to see just how worthwhile investing in a new system would really be…
Instant access to accurate information
When you need to make a fast decision or check the progress of a job, you need to be able to access real-time information that is accurate as quickly as possible. Most generic accounting systems will enable you to make fast calculations but will require you to use several spreadsheets to cost each job that you will have to complete manually, while an accounts package designed for the construction industry will provide you with an integrated solution. You need only select the job or contract you are working on to view all necessary information.
When carrying out any job it is important to determine a set budget and to keep a close eye on your progress to ensure you don’t exceed it. Budget analysis can become particularly confusing when using manual spreadsheets, especially if you have multiple budgets set for different aspects of the job. Construction software simplifies the process by automatically importing multiple budget sets and comparing costs as and when is needed, in real time. A process that might have once taken you an entire morning to complete, need only take you a few minutes with the right software.
Allocating labour costs
When using generic software you are limited to using a facility that enables you to pay people but not to record what you are paying them for. Allocating labour and material costs to contracts is necessary in order to keep a record of the work carried out and to better organise your accounts. Using just spreadsheets to do this you might find that you are creating duplicates and making the process far more complicated that it needs to be. With a construction accounts package you can record as much information as is necessary and gain access to it all in one place.
Creating business divisions
If you happen to carry out work of various types or in different locations, it would be easier to separate the work into business divisions so that you are not sifting through one area’s information to find another’s. It is unlikely that generic software will provide you with the option to split your work by your businesses divisions, instead requiring you to trawl through numerous files and spreadsheets to find what you need and move it into yet another spreadsheet. Your construction software can store all areas of work in their appropriate divisions, enabling you to view them separate or compare them at the same time.
Integrity Software boasts a team who have a great knowledge of the construction industry, which is why our software is so accommodating to your needs. If you and your company are growing tired of relying on an outdated or generic accounts system and are in desperate need of an upgrade, get in touch today.
Many of our customers switch to Integrity from generic software solutions, frustrated by the limitations of systems that aren’t designed for the construction sector.
It would seem that it was one problematic contract at North Midland Construction’s building division that dragged the group into debt, despite its rising turnover. What can you learn from their mistakes?