What’s the difference between ERP and Construction Accounting Software?
If you’re starting to feel like your construction accounting software is reaching its limits, and you’re working countless hours trying to marry data from separate systems, it may be time to look at an ERP solution.
In this article, we’ll list the capabilities of accounting software versus ERPs, talk about some benefits of ERPs, let you know when it may be time to move to an ERP, and finally give you a couple of tips to make the transition smoother.
Construction accounting software capabilities
Most construction accounting software packages include similar capabilities. Some are part of the base software package, while others may be available as an additional service.
- General ledger
- Job costing
- Accounts payable
- Accounts receivable
- Construction billing
- Inventory management
- Equipment tracking and billing
- Payroll and time tracking
Construction ERP System Capabilities
An ERP, or enterprise resource planning, the software package is focused on overall business risk management. It provides a more cohesive picture of the entire business and its activities, not just the financial portion. A construction ERP system will have the following capabilities:
- Everything listed above under construction accounting software
- Procurement – Commitment tracking
- Project management
- Compliance and human resources
- Customer relationship management (CRM)
- Change orders
- Document management
Benefits of ERPs
Besides the additional features listed above, ERP software packages provide several advantages over traditional construction accounting software.
Increased organizational efficiency – ERPs improve resource use throughout the company, leading to greater efficiencies, saving time and money.
Integrated systems – Data no longer has to be manually transferred from one system to another to get an overall picture of the company’s health.
Common database – Everyone in the company uses a common database to record and search for transactions and communications. There’s only one place to look for a piece of information or data, saving hours of lost search time.
Real-time data – Project team members and management have access to live data to assess situations and take proactive action when needed. They don’t have to wait for reports to be run or data to be collated.
Common user interface – Since everyone’s using the same software, everyone has a similar user experience, simplifying SOP development and training.
Ability to collect and compare metrics – Managers across departments can pull reports at any time to compare the information with other departments or gain new business insights. Data relationships may be discovered that hadn’t previously been noticed due to data silos.
A complete view of business performance – Management dashboards provide real-time data on business performance across departments and divisions, allowing managers to see patterns and interdepartmental trends.
Scalability – ERP systems are able to handle large amounts of data, so companies don’t have to upgrade again in a few years. The ERP system will grow with them.
Collaboration – When everyone is using the same system, team collaboration is improved and made easier. Members can review documents at the same time and discuss changes or action plans as needed.
When to move to an ERP
There are several signs that it may be time to move from construction accounting software to an ERP solution, like Jonas Premier Construction Software.
- You’re using separate databases/spreadsheets/software that requires manual data management between systems. Entering data manually into different systems increases the chance for human error and incorrect data.
- You’re using out-of-date information and analytics to make business decisions. Without real-time data on the status of projects and financial information, you’re flying blind when it comes to making important business decisions.
- Daily processes are time-consuming. If workers are spending hours performing duplicate work or searching for documents, they are losing time and the business is losing money.
- Your customer experience is suffering. If estimators aren’t following up with customers, or projects are getting lost in the shuffle, your customers will find someone else whose systems are more efficient.
Tips for converting to an ERP system
If you decide to convert from a construction accounting software to an ERP system, there are a couple of mindset changes that will help you embrace and get the most out of the new system.
First, the team has to be willing to try a new system and let go of the old software packages they’re currently using. If you have employees that insist on using old software, it could interfere with the ability of the new system to provide the information needed and to be effective. Ask these employees why they feel that way and what features are most important to them. Then work with your ERP provider to figure out how to implement those features in your system, if possible.
Second, the entire team must be open to making changes in their current processes to match the processes of the new system. Trying to maintain old processes with new software will only slow things down and prevent efficiency improvements.
Change isn’t easy
Making a change from construction accounting software to an ERP system shouldn’t be taken lightly. However, it’s a business decision that can save your company money, improve efficiency, and help management make better business decisions in the future. And with the right partner, the transition can be smooth and seamless. If you’re ready to take your business to the next level, then contact Jonas Premier today.
Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator. Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.