Question from contractor - "After years of suffering with outdated accounting software, I’ve decided to buy a new system for my construction company. The vendor has agreed to help me with installation and training. But what really worries me is actually using the software. What are the typical problems you’ve seen contractors encounter when implementing a new accounting system?"
Many construction company owners buy accounting software and, even if the installation goes well, quickly grow frustrated when they don’t get the return on investment they’d expected. From an accounting perspective, some of the primary implementation risks that contractors face are bad data, missed opportunities and cutting corners.
You’ve probably heard that old tech adage, “garbage in, garbage out.” The “garbage” referred to is bad data. It is extremely important to take the time to review current accounting records and clean up bad data like inaccurate inventory counts, duplicate vendor entries, or aging accrual balances. On a more serious level, your accounting records may contain improperly closed periods, inaccurate liability balances, or outstanding retainage balances on old jobs that have been written off or collected. If the data is bad in your old accounting system, converting to a new accounting system will not improve it.
What are the steps to take when cleaning up your accounting records before converting to new accounting software?
Another major risk to construction accounting software implementation is imprecise or incomplete job-costing data. Contractors face a distinctive challenge in integrating not only general business accounting data, but also the details of multiple, ongoing projects. A typical approach is to move job-costing info from the old system to the new one as quickly as possible, using whatever on-the-fly method seems most expedient.
Naturally, doing so can lead to data transfer errors. But, again, there’s also a risk of missed opportunity here. When upgrading to a new system, you’ll have the chance to improve your job costing. You may be able to, for instance, add new phases or cost code groups that allow you to manage project expenses much more efficiently and closely.
What steps should you take with your job costing data before converting to the new accounting software?
Don’t cut corners on training
Cutting corners on training for the new software system almost guarantees failure. Not every software is intuitive. Invest the resources and time in training to be sure that at least one person in each department that will be using the software thoroughly understands it. These individuals can then act as champions within each department to be certain that each user gets the training they need at a lower cost to the company.
Making a transition to new accounting software is not about bells and whistles, it’s about getting the right tools into your company’s hands to enable it to make the next steps towards being successful. Taking the time beforehand to clean up your data and consider improvements to your job costing structure will set you up for a successful and worthwhile software conversion. Lastly, invest in training. It will pay off double in the long run.