The increase in material costs makes it harder for construction companies to manage their budget. A recent report shows that prices of construction materials had a 19% increase this year. You must find other ways to reduce project expenses if you want to 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 both a micro and macro view of your cash flow. By having a detailed breakdown of your expenses, you can have better control over your budget. But job costing can be a time-consuming task especially if done manually. Hence, you need software to make job costing easier and more convenient.
With that, here are reasons why job costing apps are important 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 for you so that you won’t have to spend time backtracking on 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 projects 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 clearer ideas on how to allocate your resources properly in a specific project.
3. Automates 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 really affect your efficiency and productivity in the long run.
Thankfully, job costing software provides automation tools to help you get some more work done without necessarily adding on to your workload. In fact, 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 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 also automatically remove duplicates in your data entry and detect such errors. This ensures that you are always dealing with accurate information on your cash flow for each project that you are working on.
5. Improves profitability analysis
Many construction companies struggle to determine where they are profiting and where they are bleeding out. And when they finally know the answer, it is often too late 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 goes to show that business intelligence in construction is now a need rather than a luxury. You need to become more data-driven if you want to remain competitive in the market.
The construction industry is entering the digital age. The days of paper-based systems are quickly becoming obsolete. If you want to remain relevant in the market, you need to digitize your systems, especially your finance management. So aside from a job costing software, consider investing in the best construction accounting software. This will help you track all your overall finances other than your project expenses. By having both software, you can create a more seamless and streamlined accounting system for your company.