General accounting program packages are plentiful both online and in computer stores worldwide. However, if you are in the construction industry, you should really consider locating specialized construction accounting software that specifically tailored to your industry. This is because the construction industry differs from other industries in significant ways, and having the appropriate accounting tools can play a major role in the success of your business.
The issue involved is that construction projects are often the product of large value contracts. These large value contracts can involve “variations” or changes in the scope of works that are often more than the gross profit of the original planned project.
Because variations are an inherent aspect of the construction business and involve significant financial factors, failure to manage these variations can mean failure of the viability of your construction business. Construction accounting software is uniquely suited for dealing with these variations because it often includes features that highlight and track variations, while also producing the necessary documentation when variations are approved by client. Having this documentation is invaluable if a business dispute arises because a court will likely consider this documentation as evidence in your favor.
With the constant effects of variations in the scope of construction, the ever changing value of contracts and subcontracts, and payments occurring out of sync with deliverables, managers in construction companies must always strive to keep track of the accounting aspects of their projects and avoid liquidity issues as the projects progress.visit us now!
Because liquidity issues constitute one of the major reasons that many construction companies fail, construction accounting software is vital to address the ongoing status of various construction projects.
Construction accounting software is uniquely suited for managing these projects because developers of these software programs often implement features that specifically guard against liquidity issues as they arise, so that you are always informed about the status of your business. One example why this software is useful is in the area of prepayments.
Often, construction companies will receive an influx of funds prior to the completion of a project; although this influx may often be treated as “profit”, construction accounting software understands that the anticipated full expenditure has not been met and is capable of analyzing the necessary data accordingly.
Similarly, construction accounting software has the unique ability to deal with multiple transactions that occur over an extended period of time. Traditional accounting software generally assumes that clients are only invoiced for services provided, so the profit reporting feature involved in construction software can be particularly useful.
In other words, traditional software would result in tax issues because construction companies would be reporting “profit” that had not been verified or completed, thus creating tax issues and false income data.
Construction accounting software, thus, views the financial data inputted into its matrix with a broader outlook than traditional accounting software. For example, construction projects are prone to risk and delays and firms need the ability to factor these variables in when analyzing their finances. Such an ability would better ensure that projects proceed in a profitable manner.get details from the link:http://www.business2community.com/finance/top-5-reasons-not-accounting-one-stop-shop-01384081
Thus, to conclude, general accounting software fails to take several key variables into account that software specific to the construction industry includes as standard. Thus, if you are in the construction business, construction accounting software is definitely the choice for your business.…Read More