The increase in material costs makes it harder for construction companies to manage their budget. A recent report shows that construction materials prices had a 19% increase this year. It would be best to find other ways to reduce project expenses and earn more. The best way to do that is to invest in a job costing software for construction.
Job costing is one way to track expenses in a specific job. It breaks down an entire project into smaller areas, giving you a micro and macro view of your cash flow. Having a detailed breakdown of your expenses gives you better control over your budget. However, job costing can be time-consuming, especially if done manually. Hence, it would help if you had software to make job costing easier and more convenient.
With that, here are reasons why job costing apps are essential in construction companies.
1. Boosts visibility
The biggest challenge in operating a construction company is keeping track of your expenses. This gets even worse once you start managing several projects at once. Without the right tools, you can easily overlook certain costs which might lead to disastrous consequences at the end.
One of the most essential features of job costing software is its real-time monitoring. It tracks your estimates, orders, billings, and invoices so you won’t have to spend time backtracking where your money goes. It can also generate real-time reports to keep you and your clients updated. This gives you better visibility over your project’s cash flow.
2. Generates accurate estimates
Estimates have a direct impact on your profits. Dealing with inaccurate figures can lead to underestimating costs and exceeding budget. Fortunately, one of the advantages of job costing software is its ability to generate accurate estimates.
Through its robust financial reports, you can review past project spending. This allows you to determine discrepancies in your estimated costs and actual expenses. As a result, you have a more reliable basis for future project estimates and financial planning. And since job costing breaks down your project expenses into specific areas, you also have more precise ideas on allocating your resources properly in a particular project.
3. Automate tasks
No matter what industry you are in, managing finances is tedious. You end up doing the same tasks over and over again. Most of which involve a lot of paperwork. This can affect your efficiency and productivity in the long run.
Thankfully, job costing software provides automation tools to help you complete more work without necessarily adding to your workload. It does the opposite and offloads repetitive and menial tasks from your roster. It can automate processes such as:
- updating your budgets
- recording expenses and invoices
- doing computations
- generating financial reports
- importing and exporting data across channels
And if you have accounting software, consider integrating it with your job costing software. This ensures that your project expenses are always recorded into your accounting books You can also integrate it with other software like the ones in this payroll software systems list.
4. Minimizes risks and errors
Dealing with figures can be disorienting at times. This is especially true when you do it manually. As a result, you become more prone to common mistakes such as miscalculations, typos, and even miscommunications.
Minimize such risks and errors through a job or project costing software. Compared to humans, software is less prone to mistakes when computing and going over numbers. The same is true when it comes to data-entry.
Moreover, a job costing software can automatically remove duplicates in your data entry and detect such errors. This ensures that you are constantly dealing with accurate cash flow information for each project you are working on.
5. Improves profitability analysis
Many construction companies struggle to determine where they are profiting and where they are bleeding out. It is often too late when they finally know the answer, and the damage is already done. This tends to happen when you fail to consider the details of your project expenses.
A job costing software can provide you with the data you need to improve your profitability analysis. Since it breaks down your project into specific areas, it gives you a more precise and comprehensive information on your expenses and the revenue you bring in each project. Having such in-depth understanding helps you maximize your efforts towards those that will be more profitable in the end.
This shows that business intelligence in construction is now a need rather than a luxury. To remain competitive in the market, you need to become more data-driven.
Embracing digitization
The construction industry is entering the digital age. The days of paper-based systems are quickly becoming obsolete. To remain relevant in the market, you must digitize your systems, especially your finance management. So, aside from job costing software, consider investing in the best construction accounting software. This will help you track all your overall finances besides your project expenses. By having both software, you can create a more seamless and streamlined accounting system for your company.