Accounting for construction industry is different from that in other industries.
A normal industry follows stereotype accounting methods and they work for them, but when it comes to constructing industry, the scenario is vividly different.
In the construction business, people work at new locations and work done is quite different in nature, for regular terms. There are different factors that affect costing in a construction business like travel time, packing of tools and equipment, delivery of materials at the job sites, which are all variable in nature.
In a construction business, the method of accounting counts revenue on the base of the profit estimation and what percentage of the project is completed, this is known as Percentage of completion method. So overall accounting for construction business is quite complex and unique, also because it has to accurately track all the expenses, costs and income for all the different job sites.
How construction accounting differs from general accounting?
Categorization of sales: Unlike the regular business, construction business stands for wide range of selling products like engineering, coasting, labor, designs, service provided, etc.
Expense calculation: In a typical business, the expenses are mostly pre-decided or can be predicted but in a construction business, this is never the case. Even the categorization of the goods sold is differently accounted in construction business.
Knowing the break-even point: Breakeven point can be achieved by the balancing relation of income and expenses, but in a construction business, it’s very complex as there are already too many categories of the items that make it hard to comprehend.
How Meru Accounting can help you in that?
We at Meru Accounting have specialization in accounting for the construction industry, house flipping business and turnkey project accounting. We understand the different requirements that a construction business needs.
Xero Addon for Construction industry: Workflow Max Benefits
- We can have separate projects in Work flow max.
- We can have various task in that .
- Task can be assigned to each of the Team member.
- In each task we can assign the cost and Profit.
- Invoice can be automatically created in single click .
- We can convert the cost of WIP into Sales Invoice automatically.
- Margins can be assigned in the % Form to the cost.
- We can have the Budgeted Cashflow automatically from Xero.
- Purchase Orders can be automatically converted to a bill in Xero instead of Duplicate Data entry
- We will be able to have Tracking of Profits for individual Projects in Workflow Max.
- You will have all the projects Performance on your Dashboard of Workflow max.
We track, manage, report and categorize our client’s costs and expenses occurs, which ultimately help our clients to know which project to opt for, which bid can be turnout profitable, how to manage the billing procedures and how to utilize resources to get the maximum return on investments.
We track our client’s expenses and cost per property being developed by using class tracking or tracking category in the software like Xero, QuickBooks, etc. We also build a dashboard of different categories so that our clients can also track various expenses and costs from different constructing sites. That saves the valuable time of our clients and is very easy for them. We do the book work so that our clients can focus on their constructing field work without any worries.