Why You Need a Construction Accounting System Review Now
An Accounting System Review is an important housekeeping process that every company should complete at least every year. The review will help your team uncover new and more efficient workflows for your accounting process.
Of all the things you have on your plate today, why should a construction accounting software review be a priority? Three words: waste, error, and inefficiency. As we are in the midst of the ever-changing Coronavirus crisis, I am sure that a system review is not at the top of your list. Your job sites and staff take priority, but your financial system needs a little love as well.
With that said, a system review should be high on your list as you look for efficiencies throughout your system.
What is a system review?
A system review is a comprehensive look at how your system is set up, how you are operating it, and the features that you use. We also look at the features you are not using and everything you are doing outside the system, especially in Excel.
During a system review, we look at your whole process. We investigate the reporting that your managers and executives need to perform at their best and give your teams a solid direction. We then create a written report and a plan to address the most urgent needs and create an on-going training regimen that assures you top performance for the long term.
Do you need a system review now?
While the rest of the article will help you make a decision, take this survey and to get our recommendations easily.
My observation on construction software deployments
In my 32 plus years of helping contractors automate their accounting, estimating, service, and construction project management processes there is a common trait that I all too frequently encounter. It is called the set it and forget it syndrome.
Unlike any other part of their construction business, leaders more often than not allow an accounting system to be installed and never revisit the topic again –sometimes (not joking) for decades! I have watched many ideas come in and out of favor over time, including:
- Total Quality Management
- Lean Construction
- EOS, and more …
Some stick, some do not, but what is clear is that leading general contractors actively and intently research ways to improve their businesses. I have a tremendous amount of respect for the hundreds of executives that I have met over the years. These traits are why the set it and forget it syndrome is such a head-scratcher.
I believe that part of the reason for the syndrome is that the software we have installed for them runs reliably over a long period of time. Basic accounting functions then easily blend into the background of day-to-day operations. That’s a good thing, but it has also created a real opportunity in the current moment, which I will get to later in the article.
Why a system review is important to your company
We have customers that initially implemented their software 10, 15, even 25 plus years ago. Often, the people that were involved in the implementation have long since retired or are no longer with the company.
Each successive generation of staff learns some from those that have come before, but rarely seek formal training or education around the system. After all, things like accounts payable, balance sheets, job costing, and purchase orders are easy enough to navigate and what you would expect from a construction accountant.
However, each new generation usually knows a little less than those that learned before them. The new generation is more likely to assume that whatever was being done is done that way just because “that is the way it works”. Here are some things to consider:
- If your software was implemented more than five years ago, it was implemented with five-year ago thinking and the needs of that time, not today’s
- If you have had multiple generations of staff since you have implemented the software, they likely only know only what the prior generation taught them, and not everyone is a good teacher
- Each successive generation tends to know a little less than the prior and is more disconnected from resources that could help
- Software is always being updated, a new feature that appeared unimportant two (or more) years ago, and is now forgotten, may actually be important today
- The less expertise that exists in your company creates more reliance on Excel and other “outside the system” tools to accomplish tasks that could be automated
- If executives are not actively in the system on a regular basis, there’s a problem that needs attention
Even if the staff that originally implemented the system is still in place, it is all too easy to fall into the other syndrome – “that is the way we have always done it”, creating artificial and unintentional limitations
There are more things that I could list, but the reason that a system review is important is based on the bullet points above. I cannot tell you how often I have heard the comment, “I wish it would (insert your wish here)”, and my response is, “it does that”, and often times has for years. Each of these wishes is an opportunity to eliminate waste and frustration. They increase your ability to best manage the company and, best of all, there’s usually no new software required.
System reviews can help save on fixed expenses too
Just like it is important to analyze your projects for job profitability, you should also analyze your systems for profitability as well. For instance, a web-based time tracking tool may merely be a convenience or it could add some real cost savings for staff and management. On the other hand, a new construction management software solution might save you thousands (even hundreds of thousands) every year.
The bottom line is that there are a ton of industry-specific tools and systems your company can take advantage of. Just like there are all types of construction, there are also all types of tools, workflows, and guidance that can help both small businesses and large contractors.
The cost of inattention
The cost of not scheduling periodic, recurring training is significant. The worst-case scenario is that you end up changing software platforms due to perceived deficiencies and not actual issues. We have had more than one case where this very thing has happened, even contractors going back to QuickBooks Online.
Companies switch software and later discover that all the capability they wanted already existed and for a small amount of time and money, they could have had all they wanted. The more common situation is that your staff does more redundant work and loses productivity that in turn delays an executive’s ability to get up-to-date information on time. Either way, it’s a drag on resources than can be easily avoided.
The solution is straightforward, schedule an annual system review and regular recurrent training. These two actions keep you and your staff up to speed on the latest developments and your company functioning at its best. In the long run, it’s the most cost-effective approach. You avoid on-going support needs and you won’t spend on unnecessary software.
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