6 Signs You Need Construction-Specific Software
When you start a construction business, it makes a lot of sense to use QuickBooks as your accounting software. It’s affordable, easy to set up, and it helps you keep track of the numbers for your growing business. QuickBooks will track income and expenses, help you send invoices, and handle the books. It’s a good solution for a single operator, and for the launch of a new construction business.
But as you grow your construction business, things get a lot more complex. Quickly. There are more jobs running at one time. The size of your crew grows. There are more subcontractors and more compliance requirements. As a result of this growth, (a good thing!), running the business gets a lot more complicated. You’ll have to adopt workarounds if you continue using QuickBooks for construction accounting.
If you have been wondering if your accounting software is keeping up with your business growth, you aren’t the only one. We’ve created a list of clear signs it might be time to move on.
QuickBooks Was Built for General Businesses, Not Construction Specifically
QuickBooks is excellent software. It does a good job of handling basic accounting processes like general bookkeeping, invoicing, and bank reconciliation. For businesses like retailers or freelancers, it’s all you need.
But construction accounting is very different from any other industry. Contractors have to handle job costing, certified payroll, AIA-style billing, subcontractor tracking, retainage, change orders, and more. These are core construction accounting practices. There’s no getting around them. And these are where QuickBooks limitations start showing up.
Signs You’ve Outgrown QuickBooks for Construction
You’re Relying on Spreadsheets to Fill the Gaps
If you are using extra spreadsheets for tracking job budgets, subcontractor insurance expirations dates, or retainage balances, it could be a sign QuickBooks isn’t doing a complete job. Spreadsheets are a workaround that costs you extra time. The more workarounds you need, the more time you waste. It’s also where there are chances that things could fall through the cracks.
You’re Entering the Same Information More Than Once
Double data entry is a common frustration for contractors who use general purpose accounting software. If you find yourself typing the same data into QuickBooks and then into a separate job costing tool, a billing template, or a payroll spreadsheet, your systems aren’t talking to each other. It’s inefficient, and it’s risky. Double data entry increases the risk of errors that could cost you money or extra work, or both.
You Can’t See Job Costs Clearly in Real Time
A big limitation of QuickBooks software for contractors is that it does not have integrated job costing. If you are unable to easily access a report that shows costs compared to budget on any of your open jobs at any point during the project, you are forced to make key decisions based on guesswork alone. Budget overruns can sneak up on you and by the time you catch them, it could be too late to change your path. Purpose-built contractor accounting software has job costing visibility built right in.
Payroll, Especially Certified Payroll, Is a Nightmare
Construction payroll is complex. Often you could be dealing with payroll rules in different states, union wage rates and benefits, prevailing wage regulations, and Davis-Bacon compliance requirements. Tracking all that information manually via QuickBooks takes a lot of time and can be costly if you make a mistake. Errors in certified payroll can lead to compliance issues if you’re working on a publicly funded project. If your payroll takes too much time every week or causes stress and headaches whenever you reach a reporting deadline, it’s a sure sign you need something better.
Billing Takes Way Longer than it Should
If you bill your customers using AIA-style applications for payment or Time & Materials invoices, and you have to build those invoices outside of QuickBooks in a separate template or spreadsheet, that’s double the work. Construction-specific billing should be built into your accounting system so everything flows together: job costs, change orders, retainage, and invoices all in one place.
Your CPA Suggests a Change
One clear signal could be from your accountant. If your CPA has told you your audit trail is difficult to follow, your job cost reporting is lacking details, or that you should consider a more powerful system, it’s worth seriously considering this recommendation. A clean, well-documented financial record is more than just good practice. It protects your business.
What to Look for When Upgrading from QuickBooks
When you begin to evaluate alternative construction software options, you should look for a product that was built with the specific concerns of contractors in mind. General accounting software just doesn’t have tools like job costing, construction-specific payroll (which includes certified payroll, union support, and multi-jurisdictional capability), AIA-style billing, subcontract and PO tracking, document management, and comprehensive reporting.
Some may worry that switching software will mean they must start over. Busy contractors simply don’t have the time to re-enter their critical data. But upgrading from QuickBooks doesn’t mean starting from scratch. JOBPOWER, for example, can convert your existing QuickBooks customer and vendor lists when you make the switch so you can limit any downtime.
Conclusion
QuickBooks is an excellent accounting software program for contractors starting out, but once your business begins to grow substantially, you might have experienced some of the challenges listed above. The right construction accounting software will offer capabilities you have not had before, from real time job costing to compliant certified payroll and professional AIA-style billing.
If you would like to see what construction specific accounting software would do for your company, learn more about upgrading from QuickBooks, or request a free demo to see JOBPOWER in action.