Construction Accounts Receivable
Accounts receivable software tracks amounts owed by customers for products and services provided on credit and is used for monitoring effective cash management. The amount of cash collected for a job as compared to cash disbursed is an important component of measuring the financial health of an ongoing job. Progress bills for jobs in process affect accounts receivable. Accounts receivable is sometimes called “trades receivable” and is considered part of current assets. The total of Cash and Accounts receivable compared to Accounts Payable measure the liquidity of a business which is the ability to pay ongoing liabilities on a timely basis.
Time & Materials Billing
Time and materials applied to a job is money invested that you want to recoup as quickly as possible. The key to speeding up T&M cash flow is how quickly and efficiently you can record the time and materials used, then pricing it and invoicing the customer.
You will want an efficient way of capturing time, whether it is in the office or in the field at minimum daily This can be done through specialized spreadsheets, direct enter to the web or using a thin client PC in the field connected to the server. You may also be able to employ a handheld device in some cases to capture time or material usage. Fewer manual steps , which require hand written entries by field personnel, will result in less errors to slow down the billing process. It will also facilitate catching inventory shortages more quickly.
Once all time and materials is recorded you will want to review the potential billings and see if any adjustments or additions need to be made prior to invoicing. This should involve an approval process by field personnel which will require some kind of electronic approval capability. In larger contractors this may involve not only company people but subcontractors and purchasing managers.
Current and prior period amounts are adjusted as necessary by the program. You will also want the ability to reverse the applications, redo and reprint them.
Other questions you should ask yourself and prospective vendors when evaluating Accounts Receivable
How do I track sales tax collected from customers? Can I determine my sales tax liability on a cash and/or accrual basis? Can the system handle different sales tax rates by customer? Is it possible to charge sales tax on the material component of a job, but not on the labor component? How does sales tax work with contract management?
Time card collection
How is the information in the time card entered? Does the system have the ability to collect time information on-line? Does it integrate with a time-clock or web based timecard for real time cost reporting?
For comparisons of different construction software products, download the free Construction Software Selection Kit.
Review by Sheldon Needle | Construction Software