Best Construction Accounting Software in 2024

What is Construction accounting software?

For construction companies, managing payroll and accounting can get complicated due to constant communication and collaboration with contractors, subcontractors, and field teams. Accounting, therefore, becomes a crucial part of their operations. Each project in a construction company operates like its own entity with specific revenue, expenses, payroll, and other variables, making specialized accounting software essential.

Unlike general contractor accounting software, construction accounting programs include job costing features integrated with the general ledger. This allows for precise tracking, utilization, and replenishment of construction resources.

Construction accounting software evaluates the profitability of each project, highlighting key factors that influence financial outcomes. Project managers and contractors can track financial data specific to each job, improving performance and ensuring transparency in resource usage. By synchronizing project information among all team members, construction industry accounting software enhances project visibility and coordination.

How to choose the best construction accounting software for your work?

As accounting software for construction companies plays a crucial role in managing financial operations it needs to be evaluated on so many basis including;

• Assess Your Requirements: Start by identifying your current requirements. This helps narrow down choices and saves time during your research. Consider factors like your business size, job costing complexity, reporting needs, and other critical elements.
• Explore Potential Solutions: Look up potential solutions online or ask colleagues in your field for suggestions. Reviewing customer feedback for each product you're considering is crucial before making a decision.
• Feature Comparison: Compare the features of each package side by side. This allows you to make an informed choice about which one suits your current and future needs as your company grows.
• Trial and Demo Requests: Request free trials or demos for the software you're interested in. This helps you understand how it works and ensures it integrates smoothly into your workflow before committing to any expensive or long-term contracts.
• Cost Evaluation: Consider any additional costs such as implementation, maintenance, tech support, training fees, and potential add-ons like payroll services. Evaluating these factors helps you make the best decision for your business goals.

Which method of accounting is best for a construction company?

In the construction industry, where margins are often tight, it's crucial to have an effective building industry accounting software that accurately matches income with expenses. This ensures maximum profitability and sustainable business operations. Here are six key accounting practices tailored for construction companies.

1. Cash-Basis Accounting

Contractors have two main options for recording income and expenses: cash accounting and accrual accounting. Small businesses often prefer cash accounting for its simplicity. In cash accounting, transactions are recorded when money is actually received or paid. This straightforward method allows contractors to track transactions in real-time, using either a bank account or actual cash. By using cash-basis accounting, contractors can sometimes reduce their taxable income by delaying revenue recognition until the next fiscal year. However, this method may not provide an accurate picture of liabilities, making it less suitable for larger companies with extensive inventories.

2. Accrual-basis accounting

Accrual accounting, on the other hand, records transactions when they occur, regardless of when cash changes hands. This method is more complex but offers a clearer financial picture, especially for larger businesses. In accounting software for construction contractors, accrual accounting often ties into the invoicing process, allowing contractors to recognize revenue and expenses as they are incurred.

3. Job costing

A job costing system is essential for accurately bidding and estimating projects. It calculates the budget for labor, materials, and overhead costs for each project. This approach helps contractors understand their financial statements better and ensures precise project estimates.

4. Percentage of completion method (PCM)

PCM is a popular method where revenue is recognized based on the completion stages of a project. It matches revenue, expenses, and gross profit to the percentage of work completed. This method provides a more accurate financial picture over long-term contracts.

Contractors can measure completion percentages using;

• Cost-to-Cost Method: Divides total costs to date by total estimated costs.
• Efforts-Expended Method: Compares the effort expended to date with the total effort required.
• Units-of-Delivery Method: Uses the number of units delivered compared to the total units under the contract.

5. Completed contract method (CCM)

CCM defers all revenue and expense recognition until the project is completed. This method is best for short-term projects lasting less than a year.

6. Tax reporting strategies

• As the fiscal year ends, using the right accounting method is vital. For long-term projects, the Percentage of Completion method is typically required, reporting income and expenses as they occur. However, smaller projects or those meeting specific criteria can use the Completed Contract Method.
• Construction companies can also benefit from R&D tax credits for innovative activities and deductions for pass-through entities like LLCs and S-corporations. Maximizing these tax strategies helps in reducing taxable income and enhancing financial health.
• By implementing these construction accounting practices, contractors can maintain better control over expenses and maximize their profits.
• Accurate tracking of income and expenses is crucial. Utilizing specialized bookkeeping software for construction companies provides a clear picture of your financial status.

Construction Accounting Software Best Features

Construction accounting software is a crucial tool for contractors, project managers, and accountants in the construction industry. It provides a specialized financial management solution tailored to the unique needs of construction companies, efficiently handling job costing, general ledger, and payroll functionalities. Here are the core features that make accounting programs for construction companies indispensable;

1. Construction Payroll: Managing payroll in the construction industry is complex due to various regulations and compliance requirements. Construction payroll features of building industry accounting software ensure that payroll complies with federal and state regulations, equal employment opportunity (EEO) minority compliance, multi-state and multi-locality rules, automated fringe benefits, and union requirements. This functionality of accounting software for construction contractors helps construction companies manage their workforce efficiently and stay compliant with all regulatory bodies.
2. Construction Billing and Procurement: Accurate billing is essential for construction businesses. Construction accounting software includes billing features that generate and track invoices for time and materials, provide visibility into bookkeeping, track both estimated and actual job costs, and produce standardized American Institute of Architects (AIA) billing forms. Some solutions also integrate equipment management, allowing companies to track physical assets and comply with IRS regulations.
3. General Ledger: A powerful general ledger module is fundamental to any effective accounting software for construction companies. It allows construction companies to generate and manage general ledgers and relevant financial reports easily. This feature aids in making informed business decisions by providing a clear picture of the company's financial health.
4. Project Accounting: Project accounting features enable detailed tracking of revenue and costs associated with each construction project. Job reports generated through project accounting can show whether a project is on or off track, covering aspects like over or under billing, estimated versus actual costs, production tracking, and cash flow analysis. This functionality is vital for project managers and accountants to ensure the financial success of their projects.
5. Integration with Other Construction Systems: Construction accounting software that integrates seamlessly with other construction management systems streamlines workflows and reduces communication gaps. Integration capabilities are particularly important for larger construction companies or those handling complex projects, as they ensure that all systems work together efficiently, minimizing errors and improving overall productivity.
6. Forecasting: Effective accounting programs for construction companies use historical data to create accurate forecasts for future projects. By recording and analyzing job costs and trends, construction companies can predict future project outcomes, ensuring better planning and profitability. This feature helps companies maintain financial stability and achieve long-term success.

Construction Accounting Software Benefits

Many small business owners rely on accounting software, and the construction industry is no exception. However, building industry accounting software is more advanced to handle the unique challenges of the industry. These sophisticated tools are designed to enhance communication, decision-making, budget management, job costing, and more. Here are some key benefits of using construction accounting software;

1. Effective Construction Project Management: Construction industry accounting software integrates with various applications and platforms, allowing managers to track every aspect of a project. It centralizes the management of time, materials, costs, change orders, subcontractor work, and more. By keeping data constantly updated, it provides a clear financial and operational view of each project. This helps contractors identify issues early, preventing profit losses or unexpected expenses.
2. Enhanced Accounts Receivable and Accounts Payable: Contractor accounting software enables contractors to manage vendors and clients within the same dashboard. Accounts receivable features automate credit management, invoicing, payments, and collections, streamlining these processes. Similarly, AP automation handles the entire payment process from start to finish, ensuring accuracy and efficiency. This improves cash flow management and strengthens customer relations.
3. Efficient Bank Reconciliation: With accounting software for builders, bank reconciliation becomes quicker and more accurate. The system automates reconciliation, reducing human errors, identifying bank charges, and detecting fraudulent activities. This ensures a smooth financial operation.
4. Improved Budget Management: Construction projects involve numerous costs. If not managed properly, contractors risk negative cash flows. Construction accounting programs track company accounts and project expenses, allowing for detailed budget planning. They help estimate costs for materials, labor, equipment, and more, reducing the risk of over-budget issues and material waste.
5. Better Information Access: Centralizing all project-related documents through bookkeeping software for construction companies provides immediate access to up-to-date information. Everyone involved in a project can check its status at any time, facilitating smoother workflows. Immediate access helps resolve disputes, correct errors, and prevent mistakes.

Top 10 Construction Accounting Software Comparison

Below is the comparison table of top 10 accounting software for construction company along with their unique features and price

Best Construction Accounting Software Comparison
Softwares	Key Features	Pricing
QuickBooks Desktop Enterprise	ACH Payment Processing, Expense Tracking, Project Billing, Subcontractor Management	Starts at $199/month
FreshBooks	Invoice Creation, Mobile Time Tracking, Financial Reporting, Online Payments	Starts at $19/month
Procore	Job Costing, Billing & Invoicing, Progress Tracking, Compliance Management	Price On Request
Xero	Asset Tracking, Invoice Creation, Project Management, Time & Expense Tracking	Starts at $7.50/month
Buildertrend	Budgeting/Forecasting, Job Costing, Mobile Access, Purchase Order Management	Starts at $499/month
CoConstruct	Budget Control, Client Portal, Job Scheduling, Real-Time Data	Starts at $349/month
Premier Construction Software	Accounts Receivable, Budget Management, Job Tracking, Purchase Order Management	Starts at $249/month
Sage Intacct	Accounts Payable, Budget Management, Document Management, Expense Tracking	Price On Request
TallyPrime	Accounts Payable, Budgeting/Forecasting, Invoice Management, Payroll Management	Starts at $7/month
GCPay	Billing & Invoicing, Document Management, Job Management, Real-Time Reporting	Starts at $15000/year

Construction Accounting Software Pricing

Investing in construction accounting software is highly beneficial as it significantly reduces the time spent on manual management processes. This software tracks vast amounts of records, transactions, financial activities, project progress, and other aspects efficiently.

For small businesses, adapting general contractor accounting software can be affordable, typically costing under $100 per month. If a company needs dedicated contractor accounting software but doesn’t require the full suite of an enterprise solution, prices usually range between $100 and $300 per user per month, depending on the features included.

At the enterprise level, the costs can be substantial, running into tens of thousands of dollars annually. For instance, Jonas Premier charges $20,000 for initial setup and $199 per user per month.