The construction industry is renowned for its quality craftsmanship. However, it’s also sometimes known for a historical reluctance to adopt new technology.
When it comes to your construction company’s accounting and financial management, there’s never been a better time to lean into technology to improve how you handle these mission-critical functions. Here are some ideas to consider.
Review and automate processes
A good place to start is by identifying any remaining manual processes and, to the extent feasible, eliminate or automate these tasks. For example, are your employees keying in labor hours or using spreadsheets to certify payroll or manage accounting data? Do you have staff spending valuable time physically matching packing slips to invoices or filing hard copy documents in cabinets?
If any of those scenarios apply, explore electronic document management systems and tools that facilitate electronic data transfer rather than manual data entry. Automation enables faster, easier and more consistent processing. Using accounting software tailored to the construction industry — with features such as job costing, project management and contractor-specific reports — can help streamline payroll, invoicing and expense tracking to improve accuracy and save time.
Even if you have a reliable legacy system that works efficiently, there may be third-party tools available that can integrate with your system to add new functionality, better efficiency and improved user experiences. Explore whether there are better cloud-based and mobile tools on the market that allow more reliable and robust remote access and collaboration, ensuring data is updated and accessible from anywhere. This is particularly beneficial when managing multiple projects across different locations.
Another option is to migrate to an enterprise software platform that integrates critical functions such as project management, inventory management, customer relationship management and sales with accounting and financial reporting. Having your entire construction company on one platform tends to enable more consistent data-sharing across departments and enhance operational efficiency.
Perform regular financial analyses and reporting
Of course, optimizing your accounting function and financial management doesn’t end with automation. It’s critical to regularly conduct financial analyses to track cash flow, budget adherence and project profitability. Generating the right regularly scheduled financial reports will provide insights for making informed business decisions and identifying areas of concern.
Your objective is to manage regular expenses and job costs through careful monitoring and financial reporting. As you do so, be sure to have established robust internal procedures to safeguard against fraud and errors. These might include segregating financial duties so that one person doesn’t control all financial transactions or processes, conducting routine audits, and promoting ethical business practices.
Invest in training, consider outsourcing
As important as the right technology and processes are, effective accounting and financial management comes down to people. Well-trained employees are generally more accurate, productive and require less supervision. Hold regular training sessions to help your staff master the latest best practices, internal process changes and tech tools. Doing so will also keep them updated on current laws, regulations and accounting standards.
For smaller construction businesses, or those that just need some help, outsourcing may be worth considering. A carefully selected provider can eliminate or lessen the time-consuming burdens of hiring, training and retaining employees to perform accounting and financial-management duties. Strategic outsourcing involves engaging one or more outside professionals for specific or highly specialized tasks. It can boost productivity by freeing your staff to focus on core business activities or help with surges in labor needs attributable to seasonal work or multiple projects. Naturally, you’ll need to be reasonably assured of an acceptable return on investment of any outsourcing arrangement before you sign on the dotted line.
Embrace the future
Construction companies need not languish in the realm of dusty paper ledgers or outdated spreadsheets. By gradually and mindfully embracing the benefits of today’s technology, as well as fine-tuning processes and supporting employees, there’s a good chance you can streamline your accounting function and improve financial management. Please contact our firm for help.