Why is it important for Homebuilders to C Connect their Whole Business?

 

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A construction project is not just about the actual physical process of building. There are different departments and processes involved, which include accounting, costing and estimating, management and hiring, among others.

Traditionally, each department has their own way to record and manage data. And since there is no centralised database to work with, each manager has to go through a lot of manual work to get the information they need.

Now times have changed and technology advances, there are effective solutions available in the market that helps homebuilders to improve their processes.

But first, let’s take a look at the advantages of having a completely connected system for the whole business. Here are the top 5 common issues we’ve heard from homebuilders themselves:

 

1. Duplication of Data

We talk to many Homebuilders and found that a lot of companies have disconnected systems. This occurs particularly between the production department and the accounting department.

Apparently, many Homebuilders do estimating in one system, place their orders somewhere else, and then manually key in the orders into the accounting system so they can match them with invoices. Or, in some cases, they don’t even key in the orders as it is too hard. This complicates the process and triples the paperwork being done.

Issues that may arise from this include:

  • Incorrect transfer of data
  • Not seeing the up to date position of Jobs
  • Lack of Control 

Through BuilderMT and Sage Construction, Estimating, Purchasing and Accounting data is all integrated so you can record and access data on one system. Not only does it eliminate the hassle of going through separate applications, it also avoids duplicating records.

 

2. Accounts Payable Paperwork trail

Accounts Payable processing is the most time consuming and difficult area to manage in a construction business. It is really important that the estimate and order values are sent to Accounting to be processed and matched up against accounts payable invoices.

Again, this can be avoided if all of your data is easily accessed in one database. Through BuilderMT and Sage Construction, your Purchase Orders and Subcontracts are recorded against the job ready to match invoices against them.

 

3. Good Job Costing

It is crucial for any Homebuilder to have an accurate, up-to-date Job Costing system that gives them all of the information by Cost Code. Many accounting systems don’t do this function very well.

Sage Construction’s job costing function allows you to closely monitor project budget, keep track of job-specific information, use flexible cost structures and analyse jobs effectively.

 

4. Commitment Accounting

Commitment Accounting is when all of the orders are visible on the Job so that we know the cost to complete. Because our commitments are costed we know what the total cost to complete the job will be and what our future liabilities will be.

I could tell you about one company who completed their year-end accounting and had had a small loss. Just after this time, their jobs ran out and they had gone broke within 3 months after $700,000 worth of invoices they did not know about hit the system. That is why Commitment accounting is so important.

With reliable systems such as Sage Construction, it is easier to monitor invoices and see beforehand any possible losses. See the issues when they happen and come up with solutions before it worsens.

 

5. Proliferation of External reporting

Whist spreadsheets are great tools to work with there are inherent dangers with using them for your Job Costing system. Spreadsheets are used to report on Jobs in companies where the Job Costing and accounting systems are inadequate.

Spreadsheets are also single user products and not company wide applications. We want to have systems that everyone uses and we can see “one version of the Truth”.

Need consultation on construction project management software? Talk to us here.