Top 5 Common Construction Accounting Problems
1. Estimate the risk
Construction projects always require a large number of funding sources, including costs related to office space, equipment, materials, and labor. However, it is not possible to provide a clear fixed cost framework for the construction industry.
Typically, construction companies estimate that the cost of risk is about 10-20% of the total value of the project. Without company estimates, the company wouldn't be able to determine if they are making a real profit - even if it proves on paper that the project is still profitable.
The key to building control is the constant attention to changes in the construction process. All data should be updated in full every day to avoid the estimated fund risk exceeding the company's solvency. This is why companies need to quickly deploy accounting software applications for companies to build into their companies.
2. Manage warehouse and materials
Warehouse management is a job that requires a combination of many operations, from arranging materials and goods, storing goods, managing inventory, and exporting to checking the number of goods in the warehouse. For construction companies, the management of materials needs to be stricter.
To ensure the progress of the project, raw material requirements must always be fully and promptly met. In addition, accountants must also manage the material loss. This loss can come from many factors, such as the environment (which makes the steel rust and no longer usable) or the transport (sand, gravel, brick ... can fall, break during transport).
How to accurately and accurately manage the supplies of construction businesses is always a headache of the accountants. By applying accounting software to construction firms, companies are now able to provide the best and most economical solutions to their management profession.
3. Debt management according to projects, contracts
The construction industry often has many different suppliers to serve construction activities and construction sites. Therefore, accounting software for construction companies allows users to track the liabilities of each supplier, and at the same time track the liabilities of many service providers for projects or contracts.
Diversified customer base (investors purchase projects, retail customers of projects built by the company ...), a large number of contracts, payments lasting many years, accounting software also pays each installment according to the payment schedule, by project, ... Support for debt management of the construction industry
4. Managing fixed assets
To build a large-scale project requires a full range of modern tools and facilities. Unlike tourism, manufacturing, or business, the fixed asset system of the construction industry is more diversified and plentiful. Fixed assets in the building can be called: scaffolding systems, earth excavators, bulldozers, trucks, construction tools, etc. . . Different depreciation methods and different terminology.
With accounting software for construction companies, accountants can easily synthesize, statistic, and manage this volume of fixed assets. The software also fully integrates different depreciation formulas for users to choose from. If the customer is difficult to determine the rate of depreciation of fixed assets, they can contact our consulting department to resolve.
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5. Make internal reports
For construction works, construction progress is always on top priority. The accounting department needs to list the overall costs compared to the project progress quarterly or month, even weekly or daily. This helps managers have an overview of the projects that their business is implementing.
Using an accounting software construction company, accountants can easily extract data with the built-in function of reporting internal reports and financial statements. Using this utility, the accountant will not need to spend a lot of time calculating figures, just enter the data once, and can view the report at any time when needed. The software provides many tables, charts, analyses... to help managers easily control the situation and make decisions quickly and effectively.
At Construction Cost Accounting, we use a lot of online accounting software for different construction businesses depending on their needs. However, Quickbooks is the best choice for the businesses that we cooperate with because it brings the most convenience and modernity in today's accounting software.
If you have difficulty implementing accounting software or are unable to operate effectively the company's accounting department, contact Construction Cost Accounting immediately to help you complete the accounting book recording in the most optimal way
Are you ready to get help, or are you still not sure if you need help to run your construction business? Contact Construction Cost Accounting to have a free 15-minute consultation!
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