Sometimes, it is the processes that are overlooked that provide the most value. Most people who go into business are not thrilled about the prospect of accounting, but there is no denying how much it improves a business’s chance to succeed.
Considering how essential accounting is for your business, it is just as important to understand when your construction accounting system should be upgraded. Moreover, when is the best time to change accounting software tools?
There is no exact rule that tells you when to do so. However, there are many signs that you should consider getting a more powerful construction accounting software tool. The more of these signs apply to you, the higher the chance is that you should invest in a more sophisticated accounting system for your construction business.
So, what are the signs that you should choose another accounting system? Read on to learn all about the most important signs that your accounting system is out of date.
You Need an Accounting System That Handles More Transactions
When many companies start out, they have no idea how they are going to manage accounting. As a result, they end up throwing something together once they start to have orders come in. This can work in the beginning, but if a company starts to grow, it is important to find the right accounting software so that it does not get in the way of growth.
One of the main signs that you need new accounting software is that you are having trouble managing more and more transactions. This is an inevitable result of growing a successful business. However, some systems that can manage a small business cannot manage the number of transactions that a more successful business has to deal with.
Some people make the huge mistake of responding to the difficulty of managing so many orders by decreasing how many orders they get at a time. In almost every case, even a single order will more than pay for the cost of investing in a more sophisticated construction accounting system.
You Need Types of Software That Can Handle Multiple Locations
As businesses grow, they often need to set up multiple locations. At that point, they can run into serious problems if their accounting system is only designed to function at a single location.
Modern cloud accounting tools allow people at different company locations to all access the same data. They also allow you to provide different permissions to different people.
This allows you to make sure that everyone has access to all the data they need. You can also make sure that nobody has access to data that they don’t need. Not only is this possible, but this kind of achievement is also trivial for more powerful construction accounting software systems.
You Need Different Software Options for Accounting and Sales
When many companies start out, they manage their accounting and sales on the same accounting system. They may even combine sales with other parts of the company. In fact, some business owners manage sales in the beginning until they grow and develop a separate sales department.
As your sales and accounting departments grow, it is important that they can specialize. The kinds of systems that work well for sales do not have very much to do with the kinds of systems that work well for accounting. That is when you need a system that can provide a very different experience for the sales and accounting departments.
Some companies end up favoring one of these departments over the other. You might have a sales department that insists that the system is perfectly fine. Meanwhile, the accounting department might be complaining that there is something inherently wrong with the system.
The truth is that both departments may have a point. But a system that works well for sales may work well at the cost of making things awkward and difficult for the accounting department. You can avoid these kinds of problems and satisfy both departments by investing in a more sophisticated accounting system that has more functionality.
Your Construction Accounting System Is Difficult to Analyze
These days, businesses are getting more value out of big data. This is the result of more plentiful processing power that allows more thorough analysis of huge quantities of data.
On the other hand, an accounting system that was thrown together in the early days of a business will probably not be built to facilitate data analytics. Data analytics is so powerful that you do not want a simple problem like unsophisticated software to interfere with it.
Getting the right accounting software can open the door to data analytics, which can revolutionize the way a company succeeds and provides value for customers as you’ll make more informed decisions.
You Have a Simplistic Accounting System
When a company first starts out, its accounting system may consist of nothing more than an income statement and a balance sheet. This may suffice in the early days of a business with only a few transactions but there is a reason that so many esoteric accounting data sheets exist.
Used in the right way, they can empower business leaders to make important company decisions. This is just one more reminder of how much value accounting can provide.
You Cannot Automate Important Processes
Many accounting processes require performing the same task repeatedly. This type of repetition can lead to wasted time, especially since there is a good chance that modern software systems can automate it. You might consider asking your accounting department about which tasks are the most repetitive and time-consuming.
This kind of automation can provide a number of benefits. It may mean that you do not need as many accountants to perform the same work. It may also make work more pleasant for the accountants that remain. They can work on more unique tasks rather than repetitive ones.
You Are Working with Paper
Most small companies do not handle their accounting on paper. Moreover, if you are still printing paper receipts and collecting them in folders, that is a sure sign that you should modernize your accounting system.
You Need to Estimate Costs More Accurately
Sophisticated construction accounting software can help you estimate costs for jobs. They allow you to input every important aspect of a job. Then, the system can help you analyze that job.
In construction, accurately estimating costs can make or break a company. A company that has succeeded without this tool will succeed even more with it!
Understand When to Change Your Construction Accounting System
From having paper processes, lack of automation, to lack of multi-entity consolidation, there are many signs to look for when it comes to upgrading your accounting system. Although it can be challenging finding out when and how to upgrade, Bangert can help. Contact us today to find out more!