Accounting & Bookkeeping Services For Construction Companies

Invensis is a trusted provider of bookkeeping and accounting for the construction industry. We have more than two decades of experience in delivering accounting requirements for construction companies and contractors. We specialize in managing job costing, including labor, materials, and overhead allocations, which is critical for maintaining profitability in competitive bidding environments. Our construction bookkeeping services team is proficient in handling construction-specific financial management software, enabling real-time updates and seamless integration with existing systems.

Best Construction Accounting Software Reviewed For 2024

• At its core, Construction Accounting involves the meticulous tracking and allocation of costs to specific projects, often referred to as job costing.
• Dive deeper into industry hot topics to help your business stay ahead of change and plan for what’s next with our complimentary webcasts, available to view on demand.
• For instance, every construction firm aims to ensure each project is profitable, making accurate job costing critical.
• Consider the cost of insurance, travel, workers’ compensation, materials, subcontractors, equipment, and more.

Revenue recognition is how a a business determines when they’ve officially earned revenue from a contract or project. The first step for all construction firms is to open a separate business bank account that will be used exclusively for your business. Below are the key ways in which construction accounting differs from other types of accounting.

What are the Advantages of Outsourcing Bookkeeping and Accounting Tasks?

This helps us to manage your construction industry accounting requirements with ease. Construction management software is a specialized digital solution designed to streamline and optimize the various aspects of managing construction projects. These platforms provide a comprehensive suite of tools that support project planning, execution, and financial management, catering specifically to the needs of the construction industry. They are also designed to integrate seamlessly with financial software, ensuring that all project-related financial data is synchronized, accurate, and easily accessible for informed decision-making. Construction accounting involves job costing, project-based financial management, and specialized revenue recognition. Unlike general business accounting, construction accounting requires detailed tracking of labor, materials, and overhead costs for each project.

Features

Construction projects involve significant upfront costs, which require careful management and tracking to ensure profitability. Most construction accounting software on the market is intended to supplement, rather than replace, your existing accounting software. So first and foremost, it’s important to make sure that the option you choose will work with the accounting and finance tools you’re already using.

That’s useful for managing a complex mix of framing, roofing, plumbing, electrical, carpentry, drywall, painting, and other subcontractors and ensuring everyone is on the same page. Here’s my assessment of each piece of software that I chose for this list—plus what I think each one does best and what sort of construction company it’s best suited for. This will make it easy for you to send invoices online, track expenses, monitor payment status, generate financial reports, and more. The average hourly rate for an accountant in the U.S. is about $35, making it quite affordable for the average owner.

Accounts Payable

Indirect costs, also known as overhead costs, are expenses that are shared across multiple jobs and cannot be directly linked to a specific project. These may include administrative salaries, office rent, utilities, and other general operating expenses. Unlike direct costs, which are tied to specific cost codes, indirect costs are typically allocated to broader accounts. Properly managing change orders ensures that all changes are documented, approved, and reflected in the project’s budget and timeline, preventing scope creep and cost overruns.

However, the nature of construction companies makes how these businesses recognize revenue more complicated. Progress billing is one of the most widely used methods in construction, particularly for long-term projects. It allows contractors to bill clients incrementally based on the percentage of work completed during https://www.inkl.com/news/the-significance-of-construction-bookkeeping-for-streamlining-projects a specific period. This method is closely tied to the project’s timeline and milestones, providing a steady cash flow throughout the project’s duration. Accrual basis accounting matches income and costs with the periods in which they are earned or incurred, regardless of when cash is transferred.

There are a few unique benefits that construction accounting software offers over general-purpose accounting software. Project managers are responsible for making sure that their construction project stays on budget. DelTek ComputerEase has features that make it easy for managers to keep track of material, labor, equipment, and other costs.

Construction Billing and Methods

The best construction accounting software makes it easier to track projects fully, estimate building costs and manage teams — whether it’s through built-in tools or direct integrations. Features that make it stand out How to leverage construction bookkeeping to streamline financial control include daily logs, project scheduling, and job costing, allowing for seamless integration between the field and back office for reliable decision-making. Jonas even includes features to help manage your equipment and inventory, as well as documents and reports. With so many different construction accounting solutions available, figuring out which is right for you is tough. You know you want to allow for accurate tracking, analysis, and reporting of financial transactions related to construction activities, but you need to figure out which tool is best. In general, a construction business with gross receipts (also known as Business Tax Receipts) over $10 million must use the percentage of completion revenue recognition method for tax purposes.