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Why Invest in Construction Accounting Software
The accounting processes and financial controls specific to construction companies demand attention, as they represent unique challenges when compared to corporate finance. When construction accounting is handled through non-specialized tools such as Microsoft Excel spreadsheets, general financial management performance will likely falter. Legacy systems limit individual productivity and increase opportunities for potentially damaging human error to occur.
When employing construction management software such as CMiC, construction companies can take advantage of accounting features purpose-built for their industry. The constantly changing status of any given construction project will deliver financial information that construction managers have to navigate. Real-time job costing reports that deliver detailed insights can help companies maximize profitability and project completion.
CMiC Accounting & Financial Controls doesn’t just deliver one piece of the financial puzzle – its core functions include:
- Corporate & Project Forecasting
- General Ledger (GL)
- Accounts Receivable (AR)
- Accounts Payable (AP)
Furthermore, employees using the software have complete control over Human Capital Management and Asset Management. Integration between these many functions creates a single source of truth for all of a company’s financial activities. With this united view of information, leaders gain the ability to perform rich drill-downs and create insightful reports.
Freed up from legacy accounting methods, financial teams at construction companies can monitor their cash flow more closely, optimize spending, maximize the ability to win new business and ensure on-time, accurate payments which can boost vendor relationships. Delivering both data security and accessibility for key stakeholders, the purpose-built CMiC software can be an empowering upgrade for any contractor.
Why are spreadsheets an inadequate substitute for construction accounting software?
Companies that have been using Microsoft Excel or Google Sheets to organize their financial information may be hesitant to make upgrades, because this current system isn’t technically “broken.” That assessment, however, ignores the worst-kept secret in business: Construction companies handling their financials in spreadsheets are unable to perform accurate forecasting, and at greater risk of human error introducing problems to essential data.
A staggering 91% of construction companies still use spreadsheets at some stage of financial planning, budgeting or forecasting. The following are three reasons for these contractors to rethink their approach and adopt purpose-built software such as CMiC Accounting & Financial Controls:
Manually entered data invites errors. With nearly 9 in 10 manually updated spreadsheets containing errors, it’s easy to see the impact these everyday mistakes can have. A typo can have an effect on a whole data set. Productivity will fall and demands on employees will increase as the team scrambles to correct the error and make the records accurate.
High-level analytics aren’t possible with standard spreadsheets. Detailed dashboards and compelling drill-downs into data can deliver insights that help organizations make value-adding financial forecasts. Looking at a standard spreadsheet full of numbers is far less compelling than seeing a visualization generated by a modern analytics program.
Data without real-time updates can give inaccurate impressions. Executives and managers both need access to up-to-date figures based on the current status of a job, with 78% and 89% of them, respectively, saying this data is important for their success. Accounting software integrated with solutions such as human capital management and asset management can receive automatic updates from the job site. Spreadsheets demand 12-18 hours of updates per month to stay relatively current, and even with this productivity-sapping maintenance, they can’t match the accuracy and relevance of real-time financial information systems.
With an infusion of new construction management software, companies can counteract these problems, potentially boosting productivity 14-15% and realizing 4-6% cost savings through reduced errors and added real-time visibility.
What are the key features of construction accounting software?
More than simply providing an alternative to inefficient and potentially inaccurate legacy data management systems, solutions such as CMiC can assist construction companies in making notable gains in productivity, risk minimization and value creation. Implementing CMiC Accounting & Financial Controls delivers advantages at both the individual project and overall levels.
Some of the most notable benefits of CMiC’s financial features come from two particular features: automated financial controls and corporate risk management. Each of these is a true upgrade enabled by the greater data visibility possible with a centralized, purpose-built financial solution.
Automated Financial Controls: Streamline AP and AR Management
Greater automation in financial control processes is one of the central advantages associated with employing a modern construction accounting management system. These features enable the capture and analysis of every piece of relevant information, originating from all sources. The fact that CMiC unites all functional pieces of a company, from the corporate office to the job site, ensures that the real-time information flowing in is comprehensive, up-to-date and accurate. Every stakeholder can be confident that the data they’re working with is correct and complete, and make significant, authoritative decisions based on the content.
The Accounts Payable functionality of CMiC allows users to track their invoices, access online historical financial information and provide vendor support, both by company or across multiple companies. With this system, financial personnel can use automatic pre-defined transactions to perform inter-company balancing. When complex journal entries must happen on a recurring basis, these pre-defined transactions allow team members to invest less time and focus on more productive matters. Every transaction has a full audit trail, and the financial reports generated by the system can take multiple formats to suit diverse requirements.
In Accounts Receivable, the software captures all project-related billing automatically and generates ad-hoc invoicing for non-project related billing. All open receivables are visible through this system. The central customer repository enables teams to share a customer record across entities, and uses built-in duplication checking. This access is only extended to employees with the proper credentials and maintains high security standards. Data available on demand through this system includes standard logs, queries, reports and business intelligence delivered via dashboards. The data receives real-time updates, so users know they can trust it.
|Access to current and past customer and vendor transactions. Comprehensive transaction information is available on demand.||Understand the real-time financial health of a single project or the organization. The up-to-date and comprehensive figures leave no room for ambiguity.|
|The ability to create predefined transactions. Complex recurring journal entries are much quicker to log with this capability.||A shorter month/year end close period, with less manual data entry. That reduced dependence on entering data by hand also cuts the danger of human error in the figures.|
|Invoice tracking that reaches across the enterprise. Whichever department has generated an invoice, and whatever the current location of the document, it is visible.||Access to a full audit trail for every transaction. When a business question arises about a specific transaction, employees can immediately call up all the relevant data.|
|A single, centralized record that encompasses every financial transaction. The unified nature of this system reduces ambiguity and enables personnel to quickly find what they're looking for, boosting productivity.||Greater data integrity throughout the organization. The integrated and real-time updating data environment allows personnel to make confident decisions based on the figures therein.|
|Revenue account allocation across companies. Vendor support is available by company and across multiple organizations.||Optimized credit risk. An accurate and up-to-date set of financial records is ideal from a risk management perspective.|
Corporate Risk Management: A Better Approach to Ensuring Compliance
The complexities of running a construction organization introduce significant compliance hurdles for financial teams to overcome. All levels of the company deal with their own challenges, especially when the contractors in question are large or growing.
Construction businesses have to deal with regulations and government dictates in all regions they operate in. This encompasses state, national and international legal obligations. Every project and each department of the company faces a unique set of requirements, and failure to meet any will be damaging.
Using CMiC’s construction management software platform for financial risk management goes beyond the Accounting & Financial Controls module – every element of the system has been purpose-built with construction industry needs in mind. Vendor pre-qualification, worker compensation codes and rates associated with jobs, as well as cash flow management and more are all designed to measure and minimize risk. Each of these modules works in tandem to create a compliance-friendly environment.
|Compliance measurement at all levels. State, federal and international regulations are all essential to monitor.||The ability to monitor risk indicators, adjust and elevate accountability. Visibility of risk factors makes solutions clear and actionable.|
|Project and divisional compliance measurement. Each project and team within the organization should have a way to monitor its own regulatory adherence.||Greater accountability across the organization. Compliance isn't any one person or department's job - a centralized software tool allows everyone to join in this essential process.|
|Easy-to-create and -access audit trails. Every transaction leaves records to ensure business questions are quickly and definitively resolved.||Key performance indicators (KPIs) connected to key risk indicators. How do risk factors affect the organization's effectiveness? CMiC users have access to this information.|
|A central pre-qualified vendor database. Every part of the company can check on the regulatory status of vendors, building confidence and saving time.||Lower risk profile for every project. Knowledge is power, and centralized risk management capabilities empower every project and department.|
Why implement CMiC for construction accounting software?
With the comprehensive and organization-spanning capabilities of the purpose-built, web-based CMiC Accounting & Financial Controls software, organizations can unify their data and add greater automation and effectiveness to features such as AR, AP, risk management and more. Individual productivity is free to increase, while the inefficiencies and risks associated with legacy spreadsheet technologies recede. The system can scale up with organizations, while offline methods will only become more complex and unsuitable.
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