As construction businesses know only too well, there are a number of processes within the industry which challenge accounts and commercial teams every day. Particularly when trying to comply with regulations and gain true financial visibility of how the business is performing.
In the past 6 months at Integrity Software, we have seen a number of businesses move away from their standard accounting systems. Below we look at some of the common reasons which come up time and time again.
Need for improved job costing analysis
One of the main restrictions with standard generic market systems is not being able to allocate individual costs such as materials and labour, to individual jobs. Therefore trying to analyse the actual profitability of a particular contract is either highly time consuming or inaccurate.
The ability to record costs onto a contract ledger is fundamental to construction specific accounts systems and ultimately allows a business to view real time profit and loss on contracts, helping business directors to spot the disaster jobs as they come onto the horizon, and take action.
Desire to consolidate a number of disparate systems
A number of businesses we talk to have different systems for a range of processes from accounts, estimating, purchasing, subcontractors CIS management, PAYE, document management...the list goes on.
With a construction specific financial management system, businesses have the opportunity of centralising all of this information into one system. As a result the accounts team can produce far more relevant reports which provide greater visibility and support decision making for finance directors and the commercial team.
Management of applications and retentions
Issuing applications and keeping track of retentions is key to managing a successful construction business and is again a restriction we come across in standard accounts packages, preventing businesses from gaining full financial visibility.
Construction accounting software packages are designed to cater for this process and as such provide you with full visibility for retentions held against you, and also held by you against your subcontractors. Some systems also provide notifications when a retention is due to be paid and allows the finance team to report on outstanding retentions held against subcontractors.
Greater control required of working with and paying subcontractors
All construction firms are familiar with the CIS (Construction Industry Scheme) which dictates the regulations of paying subcontractors. However there are also a number of other processes such as verifying new subcontractors which can become a drain on the resources of busy accounts teams.
Most construction accounting systems provide dedicated subcontractor management modules which handle the full CIS submission process very efficiently. To lessen the burden further within our Evolution Corporate package for example, subcontractors can be verified online with HMRC automatically in just one click, saving priceless minutes on the phone every time a new subcontractor is used.
What could construction accounting software do for your business?
Above are just some of the reasons construction businesses are moving towards the use of an industry specific system. However it's only when working through the specific processes of a business in detail, the real time and costs saving benefits are identified.
If you are using a standard or generic accounts package and are interested in the benefits a construction industry specific system could do for the future of your business, please do not hesitate to contact a member of our team or register for our newsletter to stay up to date with the latest movements in the construction software market.