Running a successful construction firm demands skills in planning and managing finances. This is where construction accounting software comes in! You can use construction accounting systems to track money coming in and out and determine the profitability of different projects. You can also forecast your ability to pay bills and stay on the right side of the tax man. Getting on top of your business finances will help you get back to your true passion for building and construction!
So let’s dive in and talk more about construction accounting basics.
Construction accounting is different
Construction accounting can be more complex than accounting for other industries because it’s much harder to match income with expenses. Projects could last several years but the bulk of payments may not come through until the work is 100% finished. There are other complications too, like:
Varying size and length of construction projects. This makes allocating costs and revenues accurately between contracts difficult.
Wide-ranging cost categories. Each project could have potentially hundreds of cost categories. Additionally, many costs normally treated as overheads in other industries might be categorised as expenses under construction accounting. Particularly if they’re attributable to specific clients or projects.
Greater range of available services. These may fall into categories such as:
- Preconstruction consulting,
- Owner’s representative services,
- Program management,
- General labor contracting,
- Design mana