Construction Accounting Companion

How important is accounting in your business? Do you own a construction company and you are wondering if you hired the wrong bookkeeper? Or you are an individual who contracts construction work and you do not know how it so happens that you do not end up with the profits that you had earlier anticipated? The only way to start right is to make sure that your bookkeeping is set up right.

First you must understand that construction accounting is quite different from regular accounting. Construction accounting has evolved far beyond regular accounting methods and procedures particularly regarding revenue recognition and measure of profitability. Under construction accounting, revenue is recorded when earned rather than when cash is received - thus accrual accounting. A construction company’s measure of profitability is entirely driven from profitable projects rather than company financials. In essence, construction accounting companion is built on the basis of the above mentioned principles and those adopted from a renowned book titled ‘Construction Accounting and Financial Management Second Edition’ authored by Steven J. Peterson and is focused on managing the costs and profits of a construction company at project level rather than at company level whilst providing the user with strategic bookkeeping and cost control.

The inevitable result of non-strategic bookkeeping is the contractor making bad decisions on what to bid and not to bid on and eventually runs out of time and money. This is when Construction Accounting Companion’s job cost and job profitability (Work-In-Progress) reports come in handy. These in combination with Key Performance Indicators are what help contractors to identify where money is lost or made. They form the foundation of the business process improvement plan and construction business strategy.

Given today’s construction market, a contractor needs to know the profit position of individual projects in real time so that they can make decisions as problems or trends happen rather than “react” once a year after a Certified Public Accountant closes the books. Construction Accounting Companion’s KPI section provides the financial manager with a real time key performance analysis that will help them identify problems before they become a crisis.

Managing your construction business starts with knowing your numbers. Yes, construction Accounting Companion is an accounting app specifically designed for applied accounting in which you realize that the numbers are telling you something important about your management style and about the success of your business. It is a management truism that you cannot manage what you cannot measure. The only way to successfully manage your business is to set a standard (budget) and measure performance against that standard. If you are not doing that, then you are just hoping things turn out well for you. We do understand how hectic it is to keep track of these numbers and Construction Accounting Companion is here to save you the headache. All you have to do is to open the app, draft out your budget from your project Bills of Quantities, correctly allocate your job costs and let the system do the maths.

The management team of any successful construction company should set up and track as many profitable centers as possible. Construction Accounting Companion has been set up with more than 10 profit centers with minimum profit being tracked in a separate profit center - the profit account. It is important for management to know where the company is making its profit or loss. This allows management to focus on those areas that are most profitable, identify those areas that need improvement, identify unprofitable work that may be eliminated or subcontracted out, and identify unprofitable customers.

If you are a contractor, you deserve to be wealthy because you bring value to other people’s lives