Choosing a construction accounting software may seem like a simple decision, but it actually carries a lot of weight for your business. Do a quick Google search on the best accounting products, and you’ll probably see a lot of ads for QuickBooks Online. Advertised as an easy-to-use, smart tool for businesses, it’s become an instantly recognizable platform, and one that many smaller contractors go with when they start their business. What those ads won’t tell you though, is that QuickBooks isn’t built to meet the unique needs of construction companies.
🎥 Watch the video for 3 reasons QB doesn't work for construction accounting.Here are three reasons why QuickBooks isn’t the best accounting software for construction, and where to look instead.
Key Takeaways
- Job costing is the heart and soul of construction accounting, allowing companies to track the financial performance of projects from start to end. QuickBooks Online offers job costing, but it’s not robust or accurate enough for contractors.
- QuickBooks doesn’t support work-in-progress reporting, making it harder to manage projects and forecast future cash flow.
- Tracking both upstream and downstream retainage payments is crucial to ending projects on a good note. QuickBooks Online can’t do this.
3 Reasons Why QuickBooks Isn’t the Best Choice for Construction Companies
QuickBooks does a lot of things really well, but at its core, it’s a one-size-fits-all platform. Because construction has unique needs specific to the industry, that approach just doesn’t work well for construction companies. Here’s why.
1. It Doesn’t Support Accurate Job Costing
Technically, QuickBooks does offer job costing as a tool. When our team of veteran contractors and construction accounting experts tested it though, we found that it doesn’t come close to the kind of accuracy and detail today’s contractors need. A robust, accurate job costing module isn’t just a nice-to-have, it’s a necessity for any construction accounting software - and this is where QuickBooks falls short.
Contractors need to be able to measure the financial performance of their projects from start to finish. The more granular you can get with this data, the better, allowing you to course correct and keep each job on track to meet its financial goals. Without a good tool for job costing, you’re left guessing where your money is going, ultimately leading to potential budget overruns and less profit.
2. You Can’t Use WIP Reports
Job costing gives you an overview of how one job is doing, while work-in-progress (WIP) reports let you track financial performance across all your open jobs. Without this in your accounting system, you risk working on projects without the data you need to manage billings and monitor your backlog. This kind of information gap can make it much harder to manage projects efficiently and forecast future cash flow.
If you want to create WIP reports in QuickBooks, you’ll have to go through the headache of figuring out third-party integrations, which can add to your monthly bill.
3. Accounting for Retainage Isn’t an Option
Getting paid in construction isn’t as simple as submitting an invoice and waiting for a deposit. Retainage holdback is a common part of the job cycle, but it’s not something most generic accounting systems include.
Managing both upstream and downstream retainage is absolutely critical for keeping a healthy cash flow and completing projects successfully. QuickBooks doesn’t offer this capability, making it harder to track withheld funds and end projects on a good note.
Why Choose CrewCost?
While QuickBooks does a great job helping small business owners manage core accounting functions, it doesn’t offer enough construction-specific tools to get the job done. As you take on larger, more challenging projects, QuickBooks will struggle to meet your needs, quickly becoming a bottleneck in your operations.
CrewCost on the other hand, is an accounting solution designed specifically for construction contractors. Our 100% cloud-based construction accounting software provides an affordable, modern, and easy-to-use experience with all the tools you need right out of the gate — no third-party integrations needed. Learn how CrewCost can help you build a more profitable business and try it free for 30 days.