Construction accounting software packages provide financial accounting designed specifically with contractors in mind. Features included usually include project accounting, job costing, and specialized progress billing. Whether your construction project entails residential, commercial, or industrial work, construction accounting software will help track real-time expenses such as materials and labor, track revenue, and pay your employees effectively.
With the varying software bundles that exist (such as fully-integrated construction management software), it can be confusing to decide which option is right for you. A busy construction manager or engineer needs to spend time managing project activities rather than worry about finances.
To help you find the best solution, we’ve conducted research and put together a collection of our best picks for construction accounting software.
Vista by Viewpoint is a fully integrated construction ERP software with a strong accounting tool. Included accounting features include construction-specific payroll such as union and certified reports, a general ledger, and accounts payable and accounts receivable. The cloud-based approach provides a worry-free IT experience, and the scalable approach lets you purchase the project accounting applications on its own, and add on additional features such as project management and estimating (if needed).
Why We Like It: This construction ERP solution is scalable, highly configurable, and fully integrated to manage your operations, improve your productivity, and enable better decision-making. The solution can help reduce the accounting burden on your staff, meaning they can become more efficient in other areas of your business. Since the solution seamlessly integrates project management, accounting, and operations, Vista by Viewpoint is one of the most complete construction accounting solutions available.
Sage 100 Contractor is a popular choice for small to mid-size contractors. The integrated solution offers management and accounting tools to meet your estimating, scheduling,project management, equipment management, and payroll needs.
Why We Like It: Many users of Peachtree or Sage 50c have switched to Sage 100 Contractor due to it’s industry focus and ability to provide improved job costing and estimating. Sage 100 Contractor also has a large network of dedicated providers who specialize in implementing the software into specific facets of contracting, such as plumbing, electrical work, and more.
Premier Construction Software (formerly Jonas Premier) is a cloud construction software for general contractors, design builders, home builders, and real estate developers. The job costing feature helps find unprofitable jobs, match payments to invoices, drill down to the documents of each job, create accurate reports with real-time costs, and automate the calculation of any expenses on payroll.
Why We Like It: Job costing capabilities in Premier Construction Software will aid in dividing costs into main categories such as labor, materials, equipment, subcontractors, and any other custom fields needed. Their job costing will also let you record costs on jobs worked and compare estimated vs actual costs. The job costing capability within Premier Construction Software will overall increase customer service and billing cycle times through the use of real-time data.
Want more options? Check out our list of best construction management software.
ZipBooks is a forever free accounting software that can be used in any industry. For the construction industry, the solution stands out over other free accounting solutions (such as Wave) due to the ability to handle project accounting. The ease-of-use includes drag-and-drop expenses into cost categories, invoicing, transaction views, balance sheets, and reports.
Why We Like It: ZipBooks can be accessed anywhere you have a web-browser. If you’re on the job site, you can pull up the needed details from your phone or mobile device. The free version of ZipBooks includes unlimited customized invoicing, advanced financial reporting, and can accept digital payments via Sqaure or PayPal. The paid version of ZipBooks adds-on recurring invoicing, time tracking, multiple bank account connections, and up to 5 users.
Procore is a complete online construction management software designed to combine project scheduling and job logging with accounting financials–leaving your business with nothing left to be desired. Unlike a normal accounting system that was built for the back office, Procore Financials was created with project managers in mind–allowing them to make changes in real-time.
Why We Like It: The solution works on any mobile device, which is great for the project managers in the field who need to manage a change order or issue a purchase order. Project executives back at the office can create financial forecasts with the data the managers in the field provide. Project managers can look at where they are at in terms of project costs without having to wait until they get back to the office or even run month-end reports.
Procore can also integrate with a number of other accounting platforms, including QuickBooks Pro/Premier, Sage 100 Contractor, Sage 300 CRE, and Viewpoint (Spectrum/Vista).
To manage the large userbase of most enterprises, Procore includes unlimited users for all plans–meaning the price is determined per company depending on the products needed and amount of construction you do.
Buildertrend’s financial tools features help you manage the lifecycle of your project finances–organized in one location. This includes capabilities such as purchase orders, change orders, time clock, online payments, lien waivers, and integrations with outside tools.
Why We Like It: Buildertrend allows you to generate line-item invoices from your estimate, change order, or customer selection sheet. You can also create, compare, and send bids and notify subcontractors via email or text. Accepted bids are rolled into contracts. Invoices can be paid online via check or credit card–allowing you to be paid faster.
To better control project financials, Buildertrend allows you to manage labor costs, billing, POs, and everything else that may be included within a project budget. Purchase orders that need to be created in the field can be signed off by subcontractors before being sent to management for approval.
We’ve compiled some frequently asked questions (FAQ) from businesses searching for construction accounting software.
Construction accounting software performs a type of project accounting that has been developed for construction projects. These systems will track the financial data of every construction project you complete in real-time, while also monitoring your expenses (like the cost of materials and labor), revenue, as well as invoicing and payroll.
Construction accounting can also be found as a portion of a fully-integrated construction management software. Whatever solution your business desires, unique functionality included in construction accounting software modules include:
The construction field uses many terms not used in other fields of accounting, such as progress billing, which involves invoicing the customer based on the percentage of work completed for that billing period. Construction companies also need to account for vehicles and equipment which may or may not be owned by the company as a fixed asset.
Construction accounting is more complex when it comes to sales, cost of goods sold, expenses, and your breakeven. Construction companies usually have a variety of products and services being sold. This leads to a variety of direct and indirect job costs, leading to extremely complex expenses that can be difficult to calculate. This is because most of your projects will be custom jobs and will be harder to predict in your books.
When shopping for construction accounting software, your business should focus on the features that make construction accounting software unique. Some of these features include:
|Job Costing||Assign costs to labor, equipment, materials, and subcontractors associated with each project.|
|General Ledger (GL)||Tracks all information related to income and expenses of the company. Creates balance sheets and income statements. Maintains all details to track profitability and help make financial decisions.|
|Accounts Payable (AP)||Manage expenses from labor, equipment rentals, and materials. Maintains cash flow to ensure your bills are paid on time.|
|Accounts Receivable (AR)||Stores details on customers and integrates into the general ledger. Includes construction billing and invoicing such as AIA, time and material, and progress billing.|
|Financial Reporting||Create custom reports to visualize where your time and money is being spent for each project. Analyze expenses and net profit to see where improvements can be made to increase ROI.|
|Payroll||Manage wage calculation, direct deposit, and tax management for subcontractors and employees assigned to the project. Manage all types of construction payroll including Certified, Union, and Non-Union.|
Construction businesses that use manual methods to handle their accounting are at a huge competitive disadvantage to their competitors. Alternatively, construction businesses that use the wrong construction accounting software, or use multiple systems that all handle unique features, may struggle with integration issues or waste time on double-entry tasks.
Whatever your pain points may be, you’ll want to explore these benefits of construction accounting software to find out if an upgrade is for you.
Job cost software facilitates the assignment of costs to individual cost categories to enable improved cost control and job profitability. In construction accounting, job costing supplements the company’s general ledger. Tracking labor, equipment, material, and subcontractor costs is useful to both project managers (to ensure projects stay below budget) and financial managers (who attend to the big picture of the company’s financial health).
The biggest benefit of job cost accounting software is comparing estimated vs actual costs. This will let you monitor your financial performance in a job in real-time. Only software developed with the construction industry in mind will be able to handle both small and large jobs for your construction business.
How many construction companies need job costing? In our Construction Technology Trends report, we found that job costing was the 2nd most desired feature in construction software, with 72% of buyers saying it was necessary to be included in their ideal solution.
Detailed records of every financial movement your company makes are the first step to increasing revenue. By understanding your costs associated with completing each project, such as job costs and overhead, you’ll be able to better determine what needs to be done to become profitable. Quality construction accounting software will be able to monitor every piece of income or expense accumulated during a construction project.
Good project management will also lead to improved profitability. This is because project costs are always tied into what is deemed as a successful project–keep costs down and finish the project under budget and within a specified amount of time. Make sure you track all costs and bill for them appropriately.
Better record keeping via time tracking, material costs, change orders, and details on work a subcontractor has performed can also lead to more profitability. With better insight into these pieces of information, you’ll have a more complete view of not only your financials but also your operational plans and expectations. If a project is not performing up to standards, you can find out before you affect profits or incur a loss.
Construction accounting software can provide financial reporting that gives you better insight into your operations. These reports can help facilitate better managerial decision-making and let you monitor the performance of your business continuously.
Given the importance of job costs within construction accounting, it is important to have teh chart of accounts and job cost ledger set up professionally. Cost allocations will become easier and more accurate–meaning job cost reports will be more accurate and useful for your business.
Since cost overruns do happen in the construction industry, a work in progress reports (WIP) is another report that only a construction-focused solution is going to provide. This report tracks past work against a profit analysis schedule (useful for large or bid spread jobs), provides real-time insight into estimated earnings vs. current billings, and/or conducts a deep dive on all jobs in progress to determine which are the most profitable.
All WIP schedules will include details about the work being performed, the contract price, the estimated cost, how much has billed already, and how much cost has already occurred. These reports can be considered a 360-view of your projects that can also help show potential clients, banks, and contractor how reliable your company is.
Other reporting options within construction accounting software include consolidated financial statements, budget vs actual margins on jobs, cash and working capital status, and profitability by customer.
Your business may ask the following questions:
What is the difference between generic accounting software and construction accounting software?
With general accounting software, the functionality is built around a general ledger and allows you to track your income and assets, expenses and liabilities, and more within an accounts payable or accounts receivable module. This software was usually developed to be used by multiple industry types, and therefore doesn’t offer tips, tricks, or features unique to any one industry. The most common example of general accounting software is a product like QuickBooks Online.
A construction accounting software will have the same features of a general accounting software but also include modules specific to the needs of construction professionals. This includes project accounting, which focuses on the financial transactions related to managing a specific project rather than the company as a whole. Project accounting will track costs, billing, and revenue.
Progress billing is another construction accounting feature that would be as prevalent within a general accounting software. This invoicing method provides regular payment cadence throughout a long-term project–letting companies bill customers on a predefined timeline based on completion percentages or hitting certain milestones.
Whether or not your company can get by using a general accounting software will depend on the size and scope of your operations and the projects you’re working on. Larger companies will more often than not find comfort in the use of somethign built for their industries, while a small business may be able to pick freely depending on their budget.
What is the difference between construction management software and construction accounting software?
A construction management software will have more of a focus on non-accounting features such as estimating, scheduling, and project management.
A construction accounting solution will focus more on reporting, financial statements, and job costing.
A construction management software may sometimes lack a traditional accounting setup of accounts payable, accounts receivable, and a general ledger. This will require you to use a secondary solution for accounting.
A construction accounting solution can sometimes be defined as an accounting solution designed to be used by a construction company. This will include the AP, AR, and GL features, along with job costing and progress billing capabilities.
Rather than having two standalone solutions that work together, all-in-one tools will provide the benefits of both. A large percentage of construction software options will include accounting as either a core or optional feature. Likewise, a solution may be marketed as construction accounting software but will include non-accounting features such as estimating, scheduling, and project management.
Depending on the size of your business or the types of projects being handled, you may look towards more advanced solutions.
Job costing will be the most important feature to help you manage your basic construction accounting. Most entry-level accounting solutions should offer some sort of costing functionality. A small contractor may be able to survive using industry-neutral software such as QuickBooks or Xero, but may find themselves limited. It’s important to weigh the benefits of cost-savings in software to not having the ability to categorize costs and analyze what jobs are profitable.
Growing construction businesses should desire a more in-depth estimating tool and some level of bid management. They will also need to have an industry-specific tool and won’t be able to survive using manual methods or a generic option like QuickBooks or Peachtree. These specialized options will also have vendors who specialize in implementing their software into construction environments.
Larger construction enterprises may specialize in a specific field and need specialized software to meet their needs (such as a large commercial real-estate developer, or a civil contractor). They may also have multiple entities with a need for many end-users. These enterprise-level organizations should look into a fully-integrated construction ERP solution that provides every accounting and management tool necessary to run their day-to-day operations.
QuickBooks can be used as a construction accounting software given the availability of invoicing, job costing, and reporting features. You can monitor spending and make for each job, upload photos of receipts, and tag hours and expenses to jobs. Optional payroll features let you manage your contractors and save time on 1099s, W-9s, and tax ID inputs.
Construction companies looking to use QuickBooks for construction accounting will need to choose a version that includes QuickBooks Projects, which includes the job costing feature. This feature is only available to QuickBooks Online Plus and Online Advanced customers.
A few users of QuickBooks explained why they use QuickBooks in a construction environment:
I use it for client invoices, change orders etc… keeping track of subs costs on each job, overages on jobs for materials. It is a powerful tool that used properly will help your business with paper trails. kevjob, ContractorTalk.com
You are pretty much breaking things down into categories and then into sub categories. So if you want to know how much you spent on subcontractors… … [or] want to know how much you spent on subcontractors for job A, Job B, and Job C, you can. fast fred, ContractorTalk.com
Pricing for QuickBooks Online Plus will start at $35/month for the first 3-months. After the introductory rate, the software continues at $70/month. This includes up to 5 users. If needed, payroll will cost an additional $18/month + $4/employee/month.
While QuickBooks may work for some businesses, others will want to review alternatives or explore options that offer features QuickBooks doesn’t. Our QuickBooks Alternatives study surveyed over 4,000 cases of QuickBooks users searching for replacements.
Common functionality requirements for contractors replacing QuickBooks included better job costing, project management, equipment management, bid management, and field service management.