Keeping Up: New Concepts of Construction Financial Accounting
New Concepts of Construction Financial Accounting
Financial reporting gets a bad rap. For some, it may conjure out-of-control macros in spreadsheets, enormous binders, and tense accountants. The future of this critical function, however, is much more exciting than you could imagine and is being transformed by new construction software. Financial reporting is the process of disclosing financial data to internal and external stakeholders. In the construction industry, financial reporting often includes a detailed analysis of estimates, costs, labor, equipment, actuals, and forecasts.
“For many companies, financial reporting has indeed been a complicated ritual with a very long paper trail, even in the so-called digital age. Thankfully, advances in robotic accounting and data analytics are poised to take away much of the pain associated with producing critical financial reports. Thanks to data analytics, construction accounting has essentially never been easier."
Analytics Is Changing the Face of Construction Accounting and Forecasting
Analytics is transforming construction accounting into a fully automated function that provides accurate, real-time insight. These platforms are powerful enough to replace repetitive financial reporting tasks like data entry and manual audits. They can even utilize predictive analytics to deliver financial forecasts and predictions. AI can also add intelligence to accounting systems by “getting to know” a construction company’s financials in detail. Reports produced by machine learning can utilize descriptive analyses by looking at historical data while also offering predictive analysis models for future outcomes based on that data and prescriptive analysis that provides evidence-based advice about what to do next.
“Another remarkable improvement in financial reporting is the addition of real-time capabilities. Multiple team members can access automated machine learning analysis delivered to a cloud-based location at one time."
Forget sifting through binders of information or nagging your busy accountant to track down a financial statement or job proposal specs. Machine learning can add interactivity to the financial reporting process, which allows contractors and managers to look up this kind of information on demand. The best construction management software of our time is now available at your fingertips.
Potential Improvements in Construction Reporting
A robust analytics platform can automate and improve several standard financial tasks used in the construction industry:
→ WIP Analysis
→ Invoice processing
→ Equipment and labor forecasting
→ Gross profit by job
→ Job overhead allocation and indirect costs analysis
→ Underbilling and overbilling reconciliation
→ Cash flow by job
Analytics not only automates the creation and study of these required financial disclosures, but it also provides deep insight into the reported data that can inform strategic decision-making.
HOW ACCURATE IS YOUR REPORTING? IF YOUR IMPORTANT DATA IS NOT EASILY ACCESSIBLE FROM ONE CENTRAL PLACE, SEE HOW TO GET IT THERE.
The Impact of Better Financial Reporting
Automating and improving the accuracy of financial reporting not only saves time and manpower, but it can also lead to better forecasting and improved processes throughout the construction season. Analytics, in particular, represents added-value potential from start to finish.
Through the use of data analytics, a contractor can identify trends and uncover specific behaviors that have contributed to positive and less-than-stellar financial outcomes. An analysis that studies the differences in cash flow between similar jobs performed in different locations, for example, could uncover potential cost-savings.
Financial reports related to supply chain issues are also a prime target for improvement through applying machine learning and data analytics. This kind of analysis can help contractors pinpoint when a supply chain partnership should be severed or where overhead is being impacted by overstaffing. The possibilities are limited only by one’s imagination.
To see how Briq's products are eliminating double data entry, preventing fee erosion, and revolutionizing the way construction companies across the U.S. enhance their Fees, book your complimentary demo HERE.