Accounting for landscape construction project costs can be a tricky task. For starters, there are nuances about construction project accounting that don’t come up in landscape maintenance or other areas of the industry. And traditionally, there’s a lag between when materials are ordered, delivered, and installed and when they show up on a contractor’s books. The same goes for labor. It may be a week or two between the time the work occurs and payroll is processed before anyone knows how many hours have hit the project.
Thankfully, landscape business management systems give contractors the ability to manage these project accounting nuances and eliminate the job costing lag. The companies using this software are reaping the benefits of real-time information.
Aspire Software Accounting Specialist Peggy Hughes can’t overstate how excited she is about Aspire’s ability to handle job costs in real time. She worked in construction accounting for 30 years before joining Aspire.
“At any point in time, I can see the costs that have hit the job and forecast what my costs are going to be next month or the following month,” she says. “I can see what’s outstanding at any given time. I can see if the job is ahead of budget or behind budget — and maybe we need to take a closer look at that job.”
Hand in hand with job costing is work-in-progress (WIP) reporting. At some companies, this report consists of a spreadsheet listing all your jobs with revenue, estimated costs, and proposed gross profits.
In Aspire business management software, however, these details are maintained automatically in real time so you can build an accurate report with just a few clicks for internal or external purposes.
“If you need financing or bonding, you can present it to a bank so they can see how efficient your company is,” Hughes explains.
WIP also shows what you’ve invoiced on the project, which reveals whether you’ve overbilled and may not have enough money to complete the project or if you’ve short invoiced and are running out of money now.
“It’s an incredible tool when managing your business—and your cash,” she says.
Progress invoicing and pay applications
Progress billing is an important part of the landscape construction industry, where opportunities take a long time to reach completion.
An adjustable schedule of values and integrated payment applications play a role here, says Travis Wills, a customer success manager with Aspire.
“Rather than being locked into that schedule of values, (Aspire) clients can do whatever they need to do as long as the total matches at the end so the general contractor can pay the invoice,” Wills says.
Regarding pay applications, Aspire makes it easy, Hughes says. Pay applications are created directly from Aspire with project information and the project’s schedule of values. They’re created in numerical order, eliminating the need for Excel-generated invoices.
In construction project accounting, it’s common for the client to hold 5-10 percent of the contract amount until the end of the opportunity, as a sort of insurance policy called retainage.
A new function in Aspire deducts the retainage from the invoice and accounts for it on the end-of-month report so you know how much to expect in retainage in the future.
“At the end of the project you can hit one little plus sign, and you can invoice for it,” Hughes says.
Beyond construction project accounting, Aspire is a boon to accounting teams in general, freeing up their time to work on other priorities, according to Hughes.
For example, the accounting department doesn’t have to track down approvals for vendor invoices because those are exported from Aspire to the accounting system for payment. Likewise, direct labor payroll that’s been approved by production can be exported into the contractor’s payroll service. There’s also an easy-to-use end-of-month process, giving decision makers the information they need to keep their projects rolling on time and on budget.
Overall, much of the relief comes from the real-time nature of Aspire.
“Because the costs are hitting the projects as they’re happening, it’s easier for the accounting side to see if they have cash in the bank for payroll or to know what they’ll have to cover in overhead costs and vendor invoices,” Hughes says. “It gives the accounting team an incredible tool to forecast the future.”