What's the worst part of losing a grip on your contracting company's job costs?
Billable costs not making it to the final invoice? The difficulty of identifying which jobs are actually making money? The productivity-killing chore of reassembling ill-managed records?
How about all of the above?
Managing job costs is difficult for any contracting business. After all, the very nature of contracting conspires against making it an easy task. Job work is complex and dynamic. Conditions change. Costs fluctuate.
It's a constant business challenge. But contractors who give the problem serious attention gain major advantages over competitors who haven't done the same.
I spoke with Tim Law, Vice President of Sales & Marketing at Intersoft Systems to dig deeper into the job cost software opportunity. Tim is an expert on the topic. Intersoft Systems provides accounting and management software and has a particularly strong focus on meeting the needs of construction businesses. Tim has spent the last 8 years consulting with companies to help them leverage technology to improve management tasks such as job costing.
No doubt, the last 10 to 15 years have seen some dramatic changes in technology, and there doesn't seem to be any end in sight. While many of the changes have brought incremental improvements, some have been real game changers.
The broad acceptance of mobile devices like smart phones and tablets is changing the way things are being done in the field. These are also driving a whole new class of web-enabled software platforms which allow the field to be connected to the rest of the enterprise.
In our experience, electronic document management has been one of the most significant software enhancements in recent years. Beyond becoming a standard feature, this capability offers significant benefits across the entire organization.
Converting all those paper archives to a digital format not only saves the costs associated with maintaining all that paper, it also makes that documentation readily available to the entire team.
We like to say: "An accounting system is only as good as the information you can get out of it". Beyond just capturing income and expenses, a true job cost system must be able to provide accurate and timely information about the jobs in progress.
Having a system that enables you to create reports in formats that are meaningful to the various team members is critical. Experience has shown us that every company has slightly different preferences for how they want their reporting data presented. This may be the most important consideration for a good job cost system.
In general, the core aspects of a job cost system are the same for both general contractors and subcontractors. However, there are unique requirements in almost every situation. That is one of the reasons that Intersoft Systems chooses to offer our construction suite in an à la carte model, allowing each contractor to select the appropriate applications to address their particular requirements.
While the core job cost functionality is the same for all, there are a series of specialty applications that may be added to fill out the necessary functionality.
Having a fully integrated job cost accounting system offers significant advantages.
Integration may mean that one vendor provides all the applications as a unified solution. However, most modern systems are also capable of integrating with 3rd party applications, so you can utilize systems from multiple vendors, and still have an integrated solution.
For example: There are lots of specialized estimating systems that can easily share their estimating data with a variety of job cost systems. Integrating time clock systems with payroll is another common scenario.
There are a few simple questions that can help a construction firm to determine whether they are being adequately served by their job cost accounting system.
Does it provide:
There are lots of benefits that come with having the appropriate construction accounting software. It should make the accounting staff more efficient, the management team more effective, and the organization more profitable.
For example, just taking advantage of the electronic document management system brought all of the following business results to one of our long-time users: