We explore the many uses of CVR software in the construction industry.
Construction companies use many different types of software. Some contractors choose to use generic software solutions, while others recognise the many advantages in software that’s built specifically for the construction industry. In the past, software was only used by the big names in the construction sector, but as costs have decreased even the smallest construction company is now able to adopt construction accounting software. Cost value reconciliation (CVR) is one of many business processes often skipped over by small and medium contractors. However, many of today’s construction software packages – including Evolution Corporate and Evolution Enterprise – can help to speed up the process. How can CVR software help your company?
The role of CVR
CVR shows you the current revenues of a contract against the costs so far, essentially giving you a current snapshot of the return or net cost of a job prior to completion. CVR is carried out periodically for each job, enabling companies to track the value of contracts – usually on a monthly basis. Carrying out this process on paper is a messy, often inaccurate process that is a huge administrative burden for smaller companies. The sheer time it takes to carry out CVR in this manner means that many smaller firms choose to carry out these calculations sparingly – perhaps only on their most valuable contracts, or every few months (if at all).
CVR enables companies to view the profits or loss from each contract on a regular basis. These calculations can then be applied to help companies create profit and loss forecasts and charts for the current accounting period and beyond. For smaller companies, CVR is particularly important as it reveals the current cash position of the company, flagging up potential cashflow issues before they start to impact upon the company’s operations.
Integrity Software’s Evolution Corporate and Enterprise packages come with CVR modules. This module integrates your cost data with details of interim payments and revenue for each contract, enabling you to view CVR figures for each job instantly. There’s no maths or paperwork involved – as long as you’ve entered costs and payments into the software as and when they arise. Integrity’s CVR module also provides sign-off flexibility, where contractor managers and quantity surveyors can sign off CVR processes when required, through your standard software authorisation processes.
How to use CVR software effectively
It’s unlikely that your initial contract costing estimates will remain accurate as the contract progresses. Changing costs, client requirements and even weather conditions can impact upon the profitability of a job. CVR allows you to compare the true situation of a contract against your original expectations and forecasts. Your finance team is therefore provided with real-time visibility of the profitability of each job, and for the company (and its cash position) as a whole. Regular CVR processes provide companies with early warnings regarding costly contracts (or troublesome elements of these jobs), so that steps can be taken to put contracts back on track.
CVR software can make the difference between a disastrous contract and a highly profitable one. By identifying issues early in the contract, it’s more likely that they’ll be resolved, meaning that your business avoids cashflow problems and balance sheet difficulties. Interested in construction accounting software with a CVR function? Speak to the Integrity Software team to arrange a demo.