Accounts payable is where many job costs expenses originate. These can be from subcontractors or other outside vendors and will involve various labor and material expenses that will be charged to jobs. Receipts against Purchase Orders for materials and services can often be used to automatically create a vendor liability that will post to accounts Payable. Accounts payable also involves the management of money owed to creditors for goods and services. An accounts payable module should be able to produce reports sorted by crucial criteria, such as vendor, job number, date, etc.

What to look for in construction accounts payable
Since Accounts Payable is where most transactions will be entered, it is important to have an efficient of entering, editing and posting, those transactions. In some systems there are multiple posts from entry to the subledger to the general ledger. Likewise, voiding or correcting transactions may be simple and straightforward in one system and very cumbersome in another.

You also need to be concerned about staff productivity in entering the job-phase-cost codes for each transaction. With some systems you only need to enter the codes into the account field and the system will automatically put them together for you. In other systems, you will either have to create all possible code combinations or pull codes from a template in which case you may wind up with many more codes than actually needed for a particular job and have to delete the ones that are not going to be used and just clutter up the account list.

Accounts payable can involve some complexities
You may need to be able to create (or track) secondary payee checks or voucher checks paid by another institution. You may need to track workers compensation and other expiration dates when entering vendor bills. And you may need to track vendor bills against subcontract balances. Determine how much information you need to track for each vendor and see if it can replace or integrate with your current contact management system.

How does the system allocate payables across divisions or departments? Where do the defaults reside and how are they pulled into each invoice? How does your system track vendor information such as expired workers compensation and/or liability insurance? How can I prevent overpaying subcontractors? Does the system warn me when I enter an invoice twice? Does your system integrate with my own contact management system so I don't have to enter/update vendor information in multiple places?

How do you create subcontracts? Can you create them automatically from the budget or do you need to create them from scratch? How does the system track vendor bills against subcontracts?

Reporting
Determine your needs for accounts payable reporting. Determine what types of reports do you need, whether sorted by vendor, by job, by due date, etc. See how the software handles recurring payables such as rent, utilities, loan payments, etc.

Show me a typical A/P aging report. How does it treat retention or partial payments? Can I get an A/P report by job, by due date, by project manager? Can I get a cash requirement report by job? Does the system have a way to create and/or track an approval process for A/P?

For comparisons of different construction software products, download the free Construction Software Selection Kit.

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