Construction businesses are notorious for having a very complicated accounting system. There are many reasons why construction businesses have so much trouble when it comes to accounting. Construction companies have extremely variable revenue streams, with projects coming in at different price points and time frames, and involving different amounts of up-front capital. Additionally, construction companies tend to have to fluctuate cash flow due to the nature of their business. To make sure your business is operating efficiently and you are hitting key performance indicators (KPIs), you must implement an ERP system that is tailored specifically for your needs. In this blog post, we’ll be going over the benefits of implementing an ERP system in your business as well as some advice on what software you should choose if you’re looking to implement an Construction ERP System at your company.
Inventory and Asset Tracking
For any business, inventory tracking is a critical aspect of managing finances. This is especially true for construction businesses, where large amounts of inventory are necessary for projects and is subsequently written off over time depending on the rate of use and depreciation schedule. With an ERP system, you’ll be able to see a clear breakdown of your inventory and assets. This way, if you need to report your assets and inventory for an incentive payment or insurance claim, you’ll be able to provide accurate figures. This also helps you keep track of the useful life of your assets, and lets you know when you need to make replacements so that you aren’t operating with faulty equipment.
Cash Flow Management
One of the main things that make construction businesses so complicated is the high variability between contracts. There are often long periods between projects, followed by short bursts of activity where multiple projects come in at the same time. An ERP system can help you manage your cash flow by assisting you with early payment options and helping you accurately forecast when you’ll be receiving particular payments. This way, you’ll be able to take out money from your accounts in a timely fashion and pay bills in a timely fashion, so you don’t have to worry about being over-extended.
A real-time report shows you the latest figures from your business. Typically, construction companies will have a monthly close where you reconcile all of your accounts and numbers. This is an important step for your business—after all, it’s important to make sure your financials are accurate. At the same time, it can be difficult to determine exactly where you need to make changes if you notice a problem with your numbers at the end of the month. In an ERP system, you’ll be able to access real-time reports that tell you how your business is performing. This can be helpful if you want to quickly identify areas where you’re exceeding expectations or failing to hit key figures so that you can adjust.
Human Resources Management
Construction companies are notorious for being hazardous work environments, with long workdays and strenuous labor. An ERP system can help you keep track of your worker’s hours, help you schedule your employees, and track time off so that you can ensure you are following laws like the Fair Labor Standards Act. If your company is unionized, having accurate records of hours worked will help you comply with union contract requirements as well. With an ERP system, you’ll be able to track the hours your employees work, as well as what they are working on. This way, you’ll be able to make sure you are paying them correctly, as well as make sure that they are not working more than they should be.
Construction companies have very unique needs when it comes to accounting software. If you’re managing a construction company, you must implement construction accounting software that meets your specific needs. You need an ERP system that can manage your inventory and assets, track your cash flow, and provide real-time reports that help you stay on top of your business—even when employees are on the job site. With Nway ERP software, you’ll be able to track every asset, manage your inventory, and keep track of your cash flow. You’ll also be able to manage your HR and create real-time reports to help you stay on top of your business, no matter how complicated your construction accounting may be.