Construction Accounting 101: A Complete Guide

Introduction

Construction accounting is a vital discipline that extends beyond the traditional bounds of financial management. It’s the backbone of successful construction project management, providing the framework necessary to track, evaluate, and control costs throughout the lifecycle of a project. Whether you're managing small residential builds or large-scale infrastructure projects, mastering construction accounting is essential for ensuring profitability, compliance, and financial stability.

What You’ll Learn in This Guide:

The key elements of construction accounting and the importance of it.
The key elements of construction accounting and the importance of it.
How construction accounting differs from regular accounting and the various construction accounting methods.
The intricacies of job costing and the importance of proper job setup and maintenance.
An overview of different billing approaches, like progress and fixed-price billing, and their role in managing project finances.
The critical role of compliance with industry-specific regulations.
How integrating construction management software can streamline your accounting processes.
Common challenges in construction accounting that can impact your financial performance.
Construction accounting financial software alternatives based on the size of your business.

By the end of this article, you'll have a deeper understanding of how to effectively manage the financial aspects of construction projects, from initial contract setup to final reporting. Whether you’re a seasoned construction professional or new to the industry, this guide will equip you with the knowledge and tools needed to navigate the complexities of construction accounting and drive your projects toward financial success.

What is Construction Accounting?‍

Construction Accounting is a specialized branch of accounting that focuses on the financial management of construction projects. It encompasses a wide range of practices and procedures designed to address the unique challenges posed by the construction industry, which differs significantly from other sectors due to its project-based nature, long production cycles, and complex contractual arrangements. We know learning about Construction Accounting can be daunting, so we put together this comprehensive guide to assist you with the basics of construction accounting. If you get caught up on the construction terminology, you can also check out our Construction Accounting Glossary

At its core, Construction Accounting involves the meticulous tracking and allocation of costs to specific projects, often referred to as job costing. This process is critical for ensuring that every expense—whether it's for labor, materials, equipment, or subcontractors—is accurately recorded and attributed to the correct job. Unlike traditional accounting, which typically deals with ongoing operations and standard revenue streams, construction accounting must accommodate the variability and uncertainty inherent in construction projects.

Key Elements of Construction Accounting

Project-Based Financial Management: Construction accounting is organized around individual projects rather than continuous operations. Each project is treated as a separate entity with its own set of financial records, budgets, and cost controls. This allows for precise tracking of project profitability and helps in making informed decisions about resource allocation and pricing.
Job Costing: One of the most important aspects of construction accounting is job costing, which involves assigning all relevant costs to a specific project. This includes direct costs, such as labor and materials, as well as indirect costs, such as overhead. Accurate job costing is essential for determining the true cost of a project and for setting appropriate pricing strategies.
Revenue Recognition: Construction accounting must also manage the complex process of revenue recognition. Unlike other industries where revenue is recognized when a product is sold or a service is delivered, construction projects often span multiple accounting periods. Methods such as the Percentage of Completion (PCM) and Completed Contract Method (CCM) are used to match revenue with the stages of project completion, ensuring that financial statements accurately reflect the progress and profitability of ongoing projects.
Billing and Accounts Receivable: In the construction industry, billing is often tied to specific project milestones or completion percentages, requiring specialized billing practices like AIA billing. Managing accounts receivable effectively is crucial for maintaining cash flow and ensuring that payments are received in a timely manner.
Work-In-Progress (WIP) Reporting: WIP reports provide real-time insights into the financial status of ongoing projects. They track the costs incurred and the revenue recognized up to a certain point, offering a snapshot of project profitability and financial health.
Compliance with Industry Regulations: Construction companies must navigate a complex web of regulations, including those related to revenue recognition, labor laws (such as prevailing wage requirements), and tax compliance. Adherence to these regulations is critical for avoiding legal issues and maintaining financial stability.

The Importance of Construction Accounting

Construction accounting is not just about keeping track of finances; it’s about ensuring the financial success of your projects and your business. This specialized form of accounting plays a pivotal role in the overall management of construction projects by providing a detailed and accurate picture of your financial health. Here’s why construction accounting is so critical:

Cost Management: Effective construction accounting provides the insights needed to manage project costs meticulously. By tracking expenses at a granular level through job costing, you can identify cost overruns early, adjust budgets accordingly, and ensure that each project remains profitable.
Estimation and Pricing: With precise job costing and historical financial data, construction accounting allows you to develop more accurate estimates and set competitive pricing for future projects. This helps you maintain a balance between offering competitive bids and protecting your profit margins. Proper estimation is crucial for winning bids while ensuring the financial viability of the project.
Informed Decision-Making: The financial data generated through construction accounting equips project managers and stakeholders with the information needed to make informed decisions. Whether it's reallocating resources, adjusting timelines, or negotiating contracts, these decisions are backed by solid financial insights.
Cash Flow Management: Construction projects often have long payment cycles, making cash flow management essential. Construction accounting helps in forecasting cash flows, managing accounts receivable, and ensuring that there are sufficient funds to cover ongoing project expenses.
Revenue Recognition: Construction accounting ensures that revenue is recognized in a manner that reflects the true progress of a project. This is crucial for providing accurate financial statements and ensuring that your financial performance is not overstated or understated.
Compliance with Regulations: Staying compliant with industry-specific regulations, such as ASC 606 for revenue recognition or prevailing wage laws, is essential to avoid costly fines and legal complications. Construction accounting ensures that all financial practices align with these regulations, protecting your business from potential liabilities.
Risk Management: By providing detailed financial reports and real-time insights, construction accounting helps in identifying potential risks early. Whether it's cost overruns, delayed payments, or scope creep, being able to address these issues promptly can prevent them from escalating into more significant problems.
Project Profitability: Ultimately, construction accounting helps ensure that your projects contribute positively to your company’s bottom line. By closely monitoring expenses, revenue, and profitability metrics, you can ensure that each project is completed on time, within budget, and with healthy margins.

Construction Accounting vs. Standard Accounting

Industry Focus

‍Standard Accounting: Standard accounting, also known as corporate or general accounting, serves a broad range of industries such as retail, technology, and manufacturing. It involves standardized financial practices, including revenue recognition, expense tracking, and financial reporting, which are universally applicable across different sectors.

The focus is on maintaining financial records and ensuring compliance with general accounting standards, without the need to address specific industry nuances.
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‍Construction Accounting: Construction accounting is uniquely tailored to the construction industry. It deals with the detailed financial management of construction projects, addressing challenges such as job costing, progress billing, and adherence to construction-specific regulatory requirements.

Construction accounting integrates closely with project management processes, using cost codes and categories to meticulously track expenses like labor, materials, and subcontractors. This specialized approach allows construction firms to monitor project costs, profitability, and financial health in ways that regular accounting does not.

Costing

‍Standard Accounting: In standard accounting, costing typically involves straightforward cost allocation and inventory management. Costs are tracked at a high level, focusing on ensuring that expenses are aligned with revenue, making this approach suitable for industries with less complex projects.
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‍Construction Accounting: Costing in construction accounting is more intricate and is known as job costing. Job costing involves the detailed
allocation of all project-related costs—such as materials, labor, equipment, and subcontractors—directly to specific jobs or cost codes.

This granular tracking is crucial for managing the financial aspects of construction projects, allowing for precise cost control and profitability analysis. Work-In-Progress (WIP) reports are critical, offering real-time insights into the financial status of ongoing projects. They ensure that all costs are accurately reflected and that project profitability is continuously monitored.

Billing, Accounts Receivable, and Revenue Recognition

‍Standard Accounting: In standard accounting, billing, accounts receivable, and revenue recognition are generally straightforward processes:

Billing: Invoices are generated upon the completion of a sale or service, with payment expected according to agreed-upon terms.
Accounts Receivable (AR): Once an invoice is issued, it becomes part of the accounts receivable. The process involves tracking these receivables and ensuring payments are collected in a timely manner.
Revenue Recognition: Revenue is typically recognized when it is earned, regardless of when the payment is received, following the standard accrual accounting principles.

‍Construction Accounting: In construction accounting, these processes are more complex due to the unique nature of construction projects:

Billing: Often involves progress billing based on the percentage of work completed, using methods like AIA billing. Payment terms may include retainage, where a portion of the payment is withheld until project completion. Learn more in Construction Billing & Methods section.
Accounts Receivable (AR): Tracking AR in construction requires careful management of detailed invoices, progress payments, and the release of retainage, all of which are tied to project milestones and contract terms.
Revenue Recognition: Revenue is typically recognized using the Percentage of Completion Method (PCM), aligning revenue recognition with the progress of the project, which is crucial for long-term projects.

Accounting Methods in Construction Accounting

Accrual Method

Accrual basis accounting matches income and costs with the periods in which they are earned or incurred, regardless of when cash is transferred. This method is commonly employed in construction accounting, particularly for larger or longer-term projects, as it provides a more comprehensive understanding of a project’s profitability and financial health.

Cash Method

Cash basis accounting records income and expenses as soon as cash is received or paid. While simple to implement, this method may not provide an accurate picture of a project’s financial performance, particularly for long-term projects with multiple payment milestones.

Completed Contract Method (CCM)

The Completed Contract Method delays the recognition of revenue and expenses until a construction project is either fully or substantially completed. Revenue and expenses are recorded all at once upon project completion. This method is often used for short-term or small-scale projects where it is difficult to estimate completion percentages accurately.

Percentage of Completion Method (PCM)

The Percentage of Completion Method recognizes revenue and expenses in proportion to the work completed during a reporting period. This method is particularly useful for long-term construction projects spanning multiple accounting periods, as it provides a more accurate representation of the project’s financial performance over time.

Job Setup and Maintenance

Proper job setup and maintenance are critical to the success of any construction project. Establishing a solid foundation at the beginning of a project ensures that all aspects of the job are clearly defined, budgets are set accurately, and changes are managed effectively.

Contracts

The foundation of any construction project lies in the contract. The contract should clearly define the scope of work, payment terms, and other key conditions. A well-drafted contract minimizes disputes and ensures that all parties have a clear understanding of their responsibilities.

Budgets & Cost Estimates

Creating an accurate budget or cost estimate at the start of a project is essential. Budgets should be detailed and include all anticipated costs such as labor, materials, equipment, and subcontractor fees. Regular updates to the budget are necessary as the project progresses to ensure costs remain within expected limits.

Change Orders

Change orders are inevitable in construction projects. These are formal documents that alter the scope of work, budgets, or timelines. Properly managing change orders ensures that all changes are documented, approved, and reflected in the project’s budget and timeline, preventing scope creep and cost overruns.

Regular Estimate Adjustments

Throughout the project, it's crucial to regularly adjust estimates based on actual costs and progress. Regular estimate adjustments help in maintaining the accuracy of financial reporting and in predicting the project's final cost. This proactive approach helps in managing client expectations and ensuring the project stays on budget.

Job Costing in Construction Accounting

Job costing is a cornerstone of construction accounting, involving the precise allocation of expenses to specific construction projects. It provides detailed insights into all project-related costs, aiding in accurate cost estimation, budgeting, and profitability analysis. By tracking expenses such as labor, materials, equipment, and subcontractors at the job level, construction firms can make informed decisions, control costs effectively, and ensure that each project remains profitable.

Direct Costs

Direct costs in construction accounting are the expenses that can be directly traced to a specific job. These include labor, materials, equipment, and subcontractor expenses. Direct costs are typically assigned to specific cost codes within the accounting system, which allows for detailed tracking and management of these expenses.

For example, the cost of concrete for a foundation would be coded to a specific cost code associated with the foundation phase of the project. This ensures that all costs related to the project phase are accurately captured and reported, providing clear insights into the financial health of each job.

Indirect Costs

Indirect costs, also known as overhead costs, are expenses that are shared across multiple jobs and cannot be directly linked to a specific project. These may include administrative salaries, office rent, utilities, and other general operating expenses. Unlike direct costs, which are tied to specific cost codes, indirect costs are typically allocated to broader accounts.

In construction accounting, managing indirect costs is crucial because they can significantly impact the profitability of a project. Effective allocation of these costs helps ensure that each project bears its fair share of overhead expenses, contributing to a more accurate assessment of project profitability.

G&A Costs (General and Administrative Costs)

G&A costs represent the general expenses that support the overall operations of the company but are not directly associated with specific construction projects. These include costs such as executive salaries, corporate office expenses, legal fees, accounting services, and other administrative functions that are necessary for the company’s day-to-day operations.

While G&A costs are not directly tied to specific jobs, they must still be accounted for within the overall financial management of the business. These costs are typically spread across all projects or allocated proportionally based on certain metrics such as revenue or labor hours. Properly managing and allocating G&A costs ensures that they do not disproportionately affect the profitability of individual projects.

Incorporating G&A costs into your job costing strategy provides a more comprehensive view of your company’s financial health and ensures that all expenses, both direct and indirect, are accounted for in project profitability analyses.

Construction Billing and Methods

Construction billing is a critical aspect of construction accounting, directly influencing cash flow, project profitability, and the overall financial health of a construction company. Due to the nature of construction projects, which often span several months or even years, billing must be managed carefully to ensure that payments are received timely and accurately reflect the work completed.

Key Construction Billing Methods

In construction, several billing methods are commonly used, each tailored to different types of projects and contractual arrangements. Understanding these methods and choosing the right one for your project is essential for maintaining smooth financial operations.

Progress Billing

Progress billing is one of the most widely used methods in construction, particularly for long-term projects. It allows contractors to bill clients incrementally based on the percentage of work completed during a specific period. This method is closely tied to the project’s timeline and milestones, providing a steady cash flow throughout the project's duration.

How it Works: Contractors submit invoices at regular intervals—often monthly—detailing the work completed and the corresponding amount due. The percentage of completion is typically verified through site inspections or documented milestones.
Benefits: Progress billing aligns payments with project progress, ensuring that contractors have the funds needed to cover ongoing expenses like labor, materials, and subcontractors.

Time and Materials (T&M) Billing

Time and Materials (T&M) billing is commonly used when the project scope is not well-defined at the outset, or when changes to the scope are expected. Under this method, clients are billed for actual labor hours worked and materials used, plus a markup for overhead and profit.

How it Works: Contractors track all labor hours, materials, and other direct costs associated with the project. Invoices are submitted based on the accumulated costs, typically at regular intervals or upon reaching certain project milestones.
Benefits: T&M billing provides flexibility, allowing contractors to adjust to changes in scope without needing to renegotiate the contract. It also ensures that all incurred costs are covered.

Fixed-Price (Lump-Sum) Billing

Fixed-price billing, also known as lump-sum billing, involves a set contract price agreed upon before the project begins. Regardless of the actual costs incurred, the contractor is paid the agreed-upon amount upon project completion or based on specific milestones.

How it Works: Contractors and clients agree on a total project cost upfront. Invoices may be issued based on milestones or at project completion, depending on the terms of the contract.
Benefits: Fixed-price billing provides certainty for both parties, with clients knowing the total cost upfront and contractors managing the project to meet the agreed-upon budget.

AIA Billing

AIA billing is a standardized billing method developed by the American Institute of Architects (AIA). It is commonly used in commercial construction projects and involves using specific forms (such as G702 and G703) to request payment based on the percentage of work completed.

How it Works: Contractors fill out AIA forms that break down the project into various line items, each representing a portion of the total contract amount. Payment is requested based on the percentage of completion of each line item, minus any retainage (a portion of the payment withheld until project completion).
Benefits: AIA billing provides a clear and detailed breakdown of work completed and costs incurred, making it easier for clients to review and approve payment requests. It also standardizes the billing process, which can streamline payment approvals.

Retainage Billing

Retainage billing is a practice where a portion of each progress payment is withheld until the project is substantially complete. This provides an incentive for the contractor to finish the project to the client’s satisfaction and ensures funds are available to address any issues or deficiencies that arise during the final stages of the project.

How it Works: A percentage of each payment (typically 5-10%) is withheld by the client until the project reaches substantial completion. Once the project is completed to the client’s satisfaction, the retained amount is released to the contractor.
Benefits: Retainage protects clients by ensuring that contractors complete the project to the agreed-upon standards. It also encourages contractors to address any punch list items promptly.

Unit Price Billing

Unit price billing is used in contracts where the work is divided into quantifiable units (e.g., cubic yards of concrete, square footage of flooring). The contractor and client agree on a price per unit, and billing is based on the number of units completed.

How it Works: The contractor measures the completed units of work and invoices the client based on the agreed-upon unit price. This method is often used in civil engineering projects, such as road construction or utility installation.
Benefits: Unit price billing provides transparency and flexibility, as clients pay only for the actual work completed. It also simplifies billing for projects with repetitive tasks or work that can be easily quantified.

Importance of Compliance in Construction Accounting

Compliance with industry-specific regulations is crucial for construction companies. These regulations include:

ASC 606: The Financial Accounting Standards Board (FASB) introduced ASC 606, which fundamentally changes how revenue from construction contracts is recognized. Compliance with ASC 606 ensures accurate and consistent financial reporting.
Prevailing Wage Laws: Construction companies working on government-funded projects must comply with prevailing wage laws, which set the minimum wages that workers must be paid based on the location and type of work performed.
Tax Compliance: Construction companies must navigate complex tax regulations, including sales tax on materials and labor, state-specific tax laws, and payroll taxes for multi-state operations.

Staying compliant with these regulations is essential to avoid fines, legal issues, and reputational damage. It also ensures that financial statements accurately reflect the company’s financial position.

Integration with Construction Management Software

Construction management software plays a crucial role in modern construction projects by providing tools that extend far beyond traditional financial software. These platforms are designed to meet the unique challenges of the construction industry, ensuring that projects are managed efficiently and effectively from start to finish.

What is Construction Managment Software

Construction management software is a specialized digital solution designed to streamline and optimize the various aspects of managing construction projects. These platforms provide a comprehensive suite of tools that support project planning, execution, and financial management, catering specifically to the needs of the construction industry. They are also designed to integrate seamlessly with financial software, ensuring that all project-related financial data is synchronized, accurate, and easily accessible for informed decision-making.

Construction Management Software Vendors

Procore - A comprehensive platform that covers everything from project management to financials and documentation. It's known for its robust feature set and is widely used in commercial construction.
Buildertrend - This cloud-based software is ideal for homebuilders and remodelers, offering tools for project management, customer relationship management, and financial management.
Knowify - Designed specifically for subcontractors and small to mid-sized contractors, Knowify focuses on project management, job costing, and time tracking.
Foundation ProjectHQ - This platform offers tools to manage projects, from scheduling to financials, with a focus on streamlining workflows.

Key Strengths of Construction Management Software

Advanced Estimating: These platforms offer detailed estimating tools that allow construction companies to create accurate bids, ensuring that all project costs are considered and profitability is maximized.
Comprehensive Project Management: Unlike basic financial tools, construction management software provides features like scheduling, task assignments, resource allocation, and progress tracking. These capabilities ensure that projects stay on track, teams are coordinated, and resources are used efficiently.
Billing & Draws Management: Construction management software excels in handling various billing methods, including progress billing and time and materials billing. It also streamlines the management of retention, waivers, and draw requests, ensuring all financial processes are aligned with contract terms and completed smoothly.
Vendor and Subcontractor Portals: These platforms include portals where vendors and subcontractors can submit invoices, track payments, and manage documents. This feature enhances communication and ensures that all necessary documentation is handled efficiently.

Key Considerations When Selecting a Construction Management Software

When selecting construction management software, consider the following:

Industry Alignment: Choose a platform tailored to your specific segment, whether you’re a homebuilder, general contractor, or specialty subcontractor.
Integration with Financial Software: Ensure seamless integration for syncing transactions like expenses, bills, and invoices, as well as project data such as jobs, contracts, and cost codes.
Using Native Functionality in Financial Software: Consider whether your financial software, especially more comprehensive solutions like Sage, Acumatica, or JD Edwards, already offers native features that could fulfill your project management needs.
Pricing and Scalability: Evaluate the software’s pricing model to ensure it fits your budget and can scale with your business needs.
Reporting and Compliance: Look for robust reporting tools and features that help you stay compliant with industry regulations.

Construction management software is essential for managing complex construction projects. By choosing a platform that aligns with your industry, integrates well with your financial systems, and offers strong reporting features, you can ensure your projects are completed on time, within budget, and in compliance with all regulations.

Common Challenges in Construction Accounting

Construction accounting presents several challenges that can impact project profitability and financial stability. Some common challenges include:

Cash Flow Management: Managing cash flow is critical in construction accounting due to the long payment cycles and significant upfront costs associated with construction projects. Delays in billing or collections can lead to cash flow constraints that affect the ability to fund ongoing work.
Complex Payroll: Construction projects often involve multi-state payrolls, union payrolls, and compliance with prevailing wage laws. Ensuring accurate payroll processing while maintaining compliance with varying regulations can be complex and time-consuming.
Accurate Job Costing: Precise job costing is essential for tracking project expenses and ensuring profitability. Inaccurate job costing can lead to incorrect pricing, budget overruns, and reduced profitability.
Compliance with Regulations: Construction companies must comply with a range of industry-specific regulations, including revenue recognition standards (like ASC 606), prevailing wage laws, and state-specific tax regulations. Non-compliance can result in legal issues and financial penalties.
Project Scope Creep: Uncontrolled changes or continuous growth in project scope, known as scope creep, can lead to budget overruns and missed deadlines. Effective change order management and strict adherence to the project plan are necessary to prevent this issue.
Data Management and Reporting: Construction projects generate a vast amount of data, which must be accurately captured, managed, and reported. Poor data management can lead to errors in financial reporting, project delays, and difficulties in compliance.
Cost Overruns: Unexpected increases in project costs can arise due to poor estimation, unforeseen circumstances, or inadequate resource management. Continuous monitoring and updating of project budgets are essential to mitigate the impact of cost overruns.

Construction Software Recommendations by Revenue

Choosing the right software for your construction company requires understanding your unique needs and selecting a solution that can grow with your business. This section provides tailored recommendations for small, medium, large, and enterprise-level companies to help you find the best fit for your operations. If you want to learn more about selecting the right software and implementation best practices check out A Comprehensive Guide to Construction Financial Software Selection & Implementation Management.

To learn more about each construction software application, click the respective software link where you will get in-depth facts and analysis about each software, its costs, technology platform, how well it integrates with other 3rd party software, key features, pros, cons, and most importantly RedHammer's take!

‍‍For Small Companies (Revenue: Up to $7 Million)

Small construction companies need simple, cost-effective software solutions. This section offers recommendations for software that provides essential features without overwhelming complexity, helping you manage your business effectively.

QuickBooks Online: Ideal for small companies, offering basic accounting and job costing functionality with an easy-to-use interface.
QuickBooks Enterprise Contractor Edition: Tailored specifically for contractors, this version of QuickBooks offers specialized features for job costing, project management, and contractor-specific financial reporting.
Deltek ComputerEase: Designed for small construction businesses, offering strong accounting, project management, and job costing features.

For Medium-Sized Companies (Revenue: $7 Million to $50 Million)

Medium-sized companies require a balance between ease of use and advanced features to manage their growing needs. Consider the following options:

Sage 100 Contractor: Balances ease of use with advanced features like job costing, project management, and financial reporting, making it suitable for growing construction companies.
Viewpoint Spectrum: A comprehensive construction management solution offering robust financial and operational capabilities tailored for medium-sized businesses.
Sage Intacct: A cloud-based financial management solution that integrates well with construction operations, providing strong accounting and reporting features.
Sage 300 CRE: Designed for larger mid-sized construction firms that require detailed job costing, project management, and financial reporting.
Foundation Software: Offers robust job costing and project management features, making it ideal for medium-sized construction firms.
CMiC: Offers an all-in-one solution with integration capabilities, suitable for medium-sized companies managing a range of projects.

For Large Companies (Revenue: $50 Million to $500 Million)

Large construction firms require software that can handle the complexity of large-scale projects and intricate financials. The following options are well-suited for these needs:

Viewpoint Vista: Provides comprehensive project management, financials, and field operations, making it ideal for large firms.
Acumatica: A cloud-based ERP offering comprehensive construction management tools, excellent for large, growing companies that need scalable solutions.
NetSuite: A robust cloud-based ERP that supports complex construction operations with strong financial management, project management, and CRM capabilities.

For Enterprise Companies (Revenue: Over $500 Million)

Enterprise-level construction companies need robust software that can manage vast operations, complex projects, and extensive financials. Consider the following option:

JD Edwards EnterpriseOne: An enterprise-level ERP system that offers extensive capabilities in project management, financials, and supply chain management, making it suitable for large construction enterprises with complex needs.

Construction Accounting Key Takeaways

Specialized Practices: Construction accounting requires specialized approaches like job costing, progress billing, and revenue recognition methods tailored to construction contracts.
Cost Management: Effective cost management is essential for maintaining project profitability and staying within budget. It requires careful budgeting, proactive expense monitoring, and accurate project cost recording.
Financial Reporting: Comprehensive financial reporting provides stakeholders with transparent insights into project performance, financial health, and cash flow management. Accurate and timely reports are crucial for decision-making and compliance.
Cash Flow Management: Effective cash flow management is crucial for maintaining operations, fulfilling financial commitments, and ensuring project success. Monitoring cash flow forecasts and managing working capital are key to financial stability.
Compliance and Regulation: Adhering to industry-specific regulations such as ASC 606, prevailing wage laws, and tax regulations is critical for avoiding legal issues and maintaining financial health. Regular compliance checks and the use of technology can streamline these processes.
Technology Integration: Utilizing construction management software like Procore, BuilderTrend, and Knowify can significantly enhance job costing, compliance, and real-time reporting, leading to better project management and profitability.

How RedHammer Can Help You

Strategic System Selection: Selecting the right accounting and management software is crucial for your business’s success. We guide you through the system selection process, ensuring that you choose solutions that perfectly align with your operational needs and financial goals.
Comprehensive Outsourced Accounting Services: Our outsourced accounting services are designed to take the burden off your shoulders. We handle everything from day-to-day bookkeeping to complex financial reporting, allowing you to focus on what you do best—running your business.
Software Implementations: We manage the entire software implementation process, ensuring that your new system is set up correctly from the start. Our team handles everything from initial setup and customization to training and support, ensuring a smooth transition and minimal disruption to your operations.
Software Remediations: If your current software isn't meeting your needs, we offer remediation services to fix issues, optimize performance, and ensure that your system is properly aligned with your business processes. We identify problem areas and implement effective solutions to get your software back on track.
Tailored Process Design and Best Practices: Our deep understanding of the construction industry allows us to tailor your financial processes to align with industry best practices. We work closely with your team to design and implement processes that maximize efficiency, ensure compliance, and improve overall financial health.

Learn more about how Outsourcing Your Construction Accounting can benefit your company!