What Construction Companies Using QuickBooks Need to Know

It is quite common for small and medium businesses to invest in QuickBooks early in their journey to digitizing core functions like accounting, payroll, and billing. Construction companies also find it helpful to organize some of their major back-office administrative functions and support reporting.

Since its market introduction, QuickBooks has successfully delivered financial solutions for various businesses for a number of years. But since the early 2000s, the market has undergone significant changes with regard to operating and billing models, the scale of projects, employment contracts, and most importantly, the technology ecosystem that helps any business operate competitively.

Let us examine why construction companies need to re-evaluate their digital journey and think beyond QuickBooks.

Scalability Challenges

Construction companies need to know software like QuickBooks proves to be a worthy investment only if they run a business with less than 150 employees. The scope of digitization and software-driven management of activities has grown exponentially in the construction sector for companies larger than that.

Over time every business will aspire to grow bigger, and the construction industry is one of the most labor-intensive fields out there. Hence there is every chance that your construction business will add hundreds of jobs every year, thereby significantly putting the scope of managing the business outside the purview of QuickBooks. Even if those workers are only on the job a few days or weeks during the year, you have to include them in your roster on QuickBooks.

Without a seamless financial and accounting system in place to handle large-scale operations, there are chances of the business suffering from serious inefficiencies, which can ultimately lead to bleeding profit margins.

Difficulties With Custom Payroll and Billing Management

Today, construction activities comprise different work and pay models that measure and process parameters like time spent on work, time spent in the field, off-time (shifts, or time off?) and leaves, and several other factors that govern payment structures for workers.

We have union contracted wages, employees working under different contractual or federal provisions such as the Davis Bacon act, and much more. Billing a client ultimately requires all these factors to be considered, and QuickBooks doesn’t have a time or field module that can be leveraged for custom payroll management.

However, with platforms like Dynamics 365, building and integrating all these functions in one place is easier, thereby making it ideal for construction businesses than QuickBooks.

Restrictive Work Flexibility

We have seen how remote working has evolved into the mainstream due to the pandemic. While the construction sector doesn’t offer the perks of remote work for all employees due to its nature, there are roles that can operate remotely, especially those related to administrative, finance, HR, and corporate affairs.

However, QuickBooks isn’t well known for delivering seamless access to core operational activity across the web as efficiently as its desktop version. This is an even bigger hinderance when you consider the utility construction projects can extract from mobile versions of time and activity logging. This gap will negatively impact the flexibility of team members to work remotely in normal roles and well as in extremely challenging conditions like the pandemic.

Lack of Time Tracking

One of the biggest drawbacks construction businesses  face with QuickBooks is the manual management of time entries on paper or separate spreadsheet programs like Microsoft Excel. With more wage codes and contracts being configured to reflect close alignment with time-based wage structures, the payroll function will find it a challenging endeavor to cross-check data manually. Besides, the scope of errors will be higher when dealing with Excel-based time tracking and data management.

Thinking Beyond QuickBooks

The overarching problems of disconnected experiences (departments? Operations?) and inability to handle business expansion will cost construction companies dearly if they leverage only QuickBooks for their core operations. What they need is a system that defines and maintains a single source of truth, or ground truth for data. This data, meanwhile, can be accessed and collaboratively worked on by multiple departments with a high degree of automation.

This will help construction businesses build more transparency in their billing processes. As a result, clients will get more visibility into actual effort and materials used through automated data exchange between systems handling time tracking, payroll, project management, procurement, and attendance.

To get the best results from digitizing their core functions, construction companies need to embrace solutions that are custom-built for their domain. This will ensure that more unique work scenarios, financial nuances, and regulatory compliance norms are accommodated (adopted?)  into their digital journey.

If you are looking for a powerful alternative to QuickBooks to manage end-to-end business operations of your construction business, get in touch with us to explore a range of tailor-made construction management solutions that CEM has to offer.