How Construction Accounting Software Enhances Project Management and Profitability

Accounting plays a crucial role in the construction industry by ensuring efficient management of resources. After all, there are significant costs involved across every job, the two biggest being materials and labor. Everything—from job costing, inventory tracking, and time cards to overall project management—must be recorded and billed accurately to not only make sure your company profits, but also to understand what jobs of different sizes cost. Accurate accounting provides essential financial insights that drive informed decision-making and enhance profitability.

By having the right accounting solution, you set your business up for success. Accounting Seed, for instance, optimizes your workflows with an all-in-one platform that handles both CRM and accounting needs. It streamlines this process because it’s built natively on Salesforce.

Understanding accounting for construction

Construction accounting is unique compared to other industries in how it tracks expenses and reports its finances because its work is largely project-based. Each job is bid on and, once it’s won, it has its own timeline, a complex contract, variable costs, and multiple stakeholders. In contrast, general accounting focuses on transactions within a certain timeframe.

Key features for construction accounting software

The industry’s nature of multiple ongoing projects means you have to be on top of who’s going where and what materials are being allocated at each site while managing customer payments. There are several features built into construction accounting software that keep this process efficient:

• Labor costing helps you keep track of how many hours your employee is spending at a particular job. For example, when a time card is entered into Accounting Seed, this feature helps you determine the overall expense for each individual and adjust hours based on their pay structure (hourly or salaried).
• Budget management enables you to monitor each job’s data as they progress since ledgers in Accounting Seed highlight actual results alongside the projected budget.
• Salesforce Connectors give you streamlined access to other applications, such as Sales Cloud and Revenue Cloud. Salesforce Field Service Lightning (FSL) Connector in particular is great for construction businesses, as it allows you and other employees to manage inventory and bill customers without the need to navigate multiple databases.
• If you want deeper insight into the overall financial health of your business, multi-book accounting is a great feature. It allows you to record transactions once and maintain both cash-basis and accrual-basis records simultaneously.

AR and AP Automation for construction

Automating accounts receivable (AR) and accounts payable (AP) processes is extremely valuable for construction companies because of the industry’s complexity and volume of transactions.

Here are some key benefits of implementing AR and AP Automation:

• Efficiency: Automating your AR and AP reduces the administrative burden, allowing your team to focus on project management.
• Data accuracy and cost savings: Our software minimizes billing errors and ensures precise tracking of costs, reducing manual processing efforts and avoiding substantial late payment penalties.
• Faster payments and enhanced visibility: It expedites client payments and provides real-time insights into AR and AP statuses, improving cash flow management and project budget control.
• Stronger supplier relationships: Timely payments build trust with suppliers and subcontractors, ensuring a steady supply chain and better service terms.

With using AR and AP Automation through Accounting Seed, construction companies can handle high volumes of financial transactions more efficiently, enhancing project profitability and operational effectiveness.

Traditional accounting software misses the mark

As highlighted, there are specialized features that benefit construction accounting, such as progress billing, which most traditional accounting software does not offer. These traditional accounting systems are also limited in scalability. QuickBooks, for instance, focuses on basic accounting functions and is better suited for all companies that are new or aren’t actively growing.

Instead, consider investing in a more comprehensive accounting software like Accounting Seed. You’ll have access to more out-of-the-box tools, greater security, and robust automation features—all on a single, integrated platform. This software enables you to manage accounting lifecycles more efficiently and adapt to the evolving needs of your construction company.

A real world example: LionHeart

LionHeart ended up switching from a traditional accounting software to Accounting Seed after their old approach—a combination of QuickBooks, Excel, and Outlook—couldn’t keep up with their business goals or clients. Going back and forth between platforms really slowed them down. Once they transitioned, LionHeart grew by 40%. It wasn’t by adding more people to their accounting team—but by using a platform that streamlined their data and tools, making it easier to manage complex demands typical in their industry.