In the construction business, precision and efficiency are a must in the finances. Project-based accounting, job costing, and compliance are just too complex and many small and medium-sized construction firms cannot do it on their own. However, combining GAAP construction accounting software withoutsourced bookkeeping results in a synergistic solution that will revolutionize the way construction companies manage their books. The two help the operations and the decisions to be more streamlined, better decisions are made, and the business grows in the long run.
Bringing together the Power of Technology and Expertise
On the face of it, GAAP construction accounting software and outsourced bookkeeping are two separate solutions addressing two different sides of the accounting equation. But when you put them together, they are an integrated, complete way of managing financial tasks — more efficient than either approach by itself. Read more at Outsourced Finance and Accounting-Why It’s a Smart Move for Small Businesses.
Here’s how the combination of both creates a unified solution that benefits construction businesses:
Seamless Operations with Effortless Data Flow
The biggest challenge in construction accounting is to make financial data move from one system to another, and at the same time, between teams without errors. GAAP construction accounting software is designed to handle the complexity of construction financials including job costing, payroll, and invoicing. But to keep these systems up to date with every transaction, it is necessary that the data is entered correctly and consistently.
That’s where outsourced bookkeeping comes into play. Daily financial tasks such as entering expenses, processing vendor payments, and accounts reconciling are bookkeepers’ responsibilities. Outsourced bookkeepers ensure the financial data is continuously fed into the software so that the GAAP construction accounting software can produce real-time reports and maintain accuracy. This results in a smooth, error-free flow of information and the reliability of financial reports. Read more at How Regular Financial Recording Keeps Your Business Running Smoothly.
Smarter Decision Making with Real-Time Insights
Up-to-the-minute financial data is necessary for construction businesses to make smart proactive decisions. For this, it needs robust accurate reporting that takes into consideration all costs and revenues and enables managers to keep tabs on the project progress. The data input into the system can be used to generate detailed financial reports under GAAP construction accounting software.
However, without the right and consistent data entry, these reports may not tell the true story of the business. When combined with outsourced bookkeeping, businesses get consistent bookkeeping to make sure all transactions are entered on time and correctly. As a result, you get highly accurate financial reports that give you a deep insight into project costs, revenue forecasts, cash flow management, and so on. Using the combination of both, these insights give businesses the ability to make strategic decisions that will help them increase profitability and stay on track with projects. Read more at The Critical Role of Profitability Analysis in Strategic Decision-Making.
Control of Project Budgets
In the construction industry, staying on budget is essential to stay profitable. Accounting software is meant to be used to breakdown expenses into various categories such as labor, materials, and overhead at the project level. This gives business owners and project managers a bird’s eye view of each project’s financial health.
Correctly applied bookkeeping means that every invoice, payment, and expense is captured and recorded accurately. The two systems act together to monitor project budgets in real-time. The outsourced bookkeepers enter costs into the GAAP construction accounting software as they come in, to ensure that the data is recorded correctly and without error so that cost overruns and delayed billing do not occur. This synergy helps construction companies monitor costs more effectively, and keeps projects within budget. Read more at Building Robust Budgets: Cost Control Techniques for Construction Projects.
Maximizing Efficiency and Minimizing Overhead
The biggest time and resource saver of software in conjunction with outsourcing is a no-brainer. Often, construction managers and owners are responsible for many things, and financial management is put aside.
While accounting software can make many financial processes easier, it only works as well as the data it gets. With businesses doing their own bookkeeping, data entry can happen later and mistakes can occur. Outsourcing bookkeeping tasks can help businesses trust professionals in routine financial tasks so in-house teams can concentrate on project execution and growth. Read more at How Outsourcing Accounting Services Helps Small Businesses Save Time and Money.
Not only does this save time but also it takes less burden off of internal resources. Together the two solutions create a win for construction businesses in that they can become more productive by automating routine tasks which allows more time for strategic planning and business development.
Financial Confidence to Scale Your Construction Business
The more the construction businesses grow, the more complicated their finances become. As the scale of operations grows, the number of projects that need to be tracked, the cash flow to be managed, and the compliance with tax regulations get difficult to manage.
Accounting software is built to grow with companies, adding more advanced features as the company continues to grow. Nevertheless, to harness the software’s potential, businesses require accurate and timely financial data. The beauty of outsourced bookkeeping is that it can adapt very easily to meet the growing needs of a business without having to add more full time staff. Combining the two offers construction businesses a flexible, scalable solution that scales up with them—making it easier to deal with the financial complexity of larger projects or when adding more operations. Read more at The Benefits of Outsourcing Accounting Services for Small Businesses.
Easy Tax Compliance
Construction companies make tax season even more stressful than most, with project-based accounting, subcontractor payments, and many tax deductions that can be taken in the industry. Accounting software will help you comply with industry standards and keep a record of all financial transactions.
But, tax laws and compliance requirements are always changing and businesses have to keep up with them. In cases where companies can combine outsourced bookkeeping with GAAP construction accounting software, they can be sure that all books are up to date and per the law. Working with a tax professional and an outsourced bookkeeper can help keep the liability down by tracking changes in tax law, recording them, and working with tax professionals to minimize liability. Proactive financial management at this level keeps the business from making costly mistakes and ensures the business is ready for tax season. Read more at Top Accounting and Tax Services Every Small Business Needs in 2024.
Conclusion
GAAP construction accounting software combined with outsourced construction bookkeeping provides a powerful construction financial management system that is accurate, efficient, and scalable. They work together to form a workflow that reduces human error, improves financial reporting, and gives better project cost control. Outsourcing the routine tasks of bookkeeping and pairing it with specialized accounting software enables construction businesses to concentrate on the things they do best, delivering successful projects, while leaving financial complexities to the experts. This winning combination is what aids construction firms to grow, scale, and prosper in a competitive market.
If you’re ready to transform the financial management of your construction company, 406 Consulting is here to help. Our tailored solutions are designed to meet the unique needs of small businesses. Reach out to us today to unlock your business's full potential.
