In my 7 years of close cooperation with general contractors, developers, and real estate professionals, I have seen various accounting books where users were not able to properly interact with the accounting software.

So, it was not like they didn’t know accounting or had issues understanding the transaction’s nature but their selection of the accounting software was not appropriate.

So, based on my personal experience, I decided to write this article and suggest the businesses QuickBooks online for their construction-related business.

Please note we don’t have affiliation with any accounting software service provider. So, our opinion is purely based on experience and business understanding.

So, are you excited to know what makes QuickBooks the best choice and why we recommend it to construction and real estate professionals?

Key features

Transaction syncing

Once you have connected your bank with the QBO, it’s time to say goodbye to the lengthy and hectic data entry practice. You are just required to click on the update button and all transactions can be seen on the screen with the date of execution in the bank. Hence, you don’t need to manually enter data which leads to increased accuracy, and a structured approach to keep the books in order.

How do you sync banking transactions in QBO?

Automatic categorization

Using the principles of machine learning, the QBO can understand the nature of transactions synced from the bank. For instance, you pay $300 for janitorial services and are repeatedly classified the same as “cleaning expense”. The QBO learns (using principles of machine learning). In the next syncing, the transaction with $300 is classified as a cleaning expense automatically.

Similarly, machine learning is smart enough to understand higher/bigger amount is related to capital expenditure. (QBO understands big transactions are usually related to capital expenditures).

Allocate the project to the transaction

At the time of categorizing the transaction, you can select a project that drives this specific transaction. For instance, as a construction developer, you may be developing multiple projects. So, you can allocate the specific transaction to the relevant project.

This allocation helps ensure you’ll be able to analyze the project profitability and make informed business decisions.

Real-time reporting

The best part of QBO is that all reports (project profitability, project progress, profit and loss, balance sheet, and cash flow) are updated in real-time. You just post the transaction and it does not take time to update the numbers, graphs, and trends.  

I am specifically highlighting a dashboard that shows comprehensive graphs, trends, completion percentages, and other details about the projects under consideration. So, the technical aspect of your work is now limited to posting the transaction in the correct chart of account and the system takes care of further accounting.

Easy scalability

The QBO is designed to grow with the growing demands of your business. Being a bookkeeping professional for years, I’ve seen people questioning on ability of the implemented accounting software to accommodate the growing demand of their business but that’s really not the case with QBO. So, relax and believe QBO can be an excellent choice even if your business grows to medium size.

Construction-specific advantages of QBO

As an ACCA professional accountant and certified bookkeeper specializing in construction finance, I’ve helped dozens of contractors streamline their accounting with QuickBooks Online.

Below are the top construction-specific benefits of QBO, paired with real-world examples related to my own clients.

1-Accuracy in terms of job costing & project profitability

Using QBO enables us to track each component of the cost category like foundation, framing, labor, plumbing, finishing etc. This tracking enables us to compare the specific cost with the budget and conclude on corrective actions to remain profitable.

My personal experience – I was working for a construction contractor with around 13 projects under construction. They were using some different accounting software with no ability to track project-specific costs.

Once we converted the data to QBO and allocated transactions to the projects using an overhead allocating method called ABC costing (Activity Based Costing), it was surprising to note their financially favorite project was actually adding to lower profits due to higher plumbing costs (overhead). It helped us to figure out the cost gap and control the project’s profitability by at least 15%.

I believe ABC costing helped us to properly allocate plumbing overheads and get true profitability for each project under consideration. It would have not been possible without implementing the software appropriately.

2-Retention accounting (AIA compliance)

I’ve experienced compliance with retention accounting is often challenging, time-consuming, and one of the technical areas leading to disputes between the contractor and their client. To help with this problem – QBO is able to automatically track retainage balance once specified setting is installed. We just need to allocate agreed percentage of revenue to retention receivable while generating the sales invoice. So, it’s easier to ensure compliance with the AIA guidelines for executing the contracts.

3- Change order management

QBO enables us to embed changing budget requirements (change orders) in project progress analysis. In simple words, the budget is updated when we enter a change order. This update is reflected in real-time throughout the project profitability/progress reports. Here is the workflow.

1. Approved change order received from the customer (specifying installation of handrailing).
2. The existing estimate/budget is updated in the QBO based on the approved change order.
3. Assign an additional cost of fulfilling the change (installation of hand railing).
4. Generate the change order impact report and analyze revised project progress/profitability.

Personal experience – The use of workflow in QBO helped our client (general contractor) to determine true project profitability after incorporating workflow in QBO.

Please note feature of embedding change order is given by other accounting software as well. However, it’s not as easy, reliable, and interactive as offered in QBO.

Conclusion

It’s a good idea to consider QuickBooks online for your small construction business.

It will help you achieve smooth bookkeeping & accounting experience with the ability to professionally track project profitability, ensure compliance with AIA obligations, and retain accounting.

I’ve helped dozens of contractors, developers & real estate business owners to achieve smooth and professional bookkeeping experience.

So, if you are still struggling with a selection of the right accounting solution for your business, as an ACCA-qualified QBO ProAdvisor, I’ll set up your system and make sure your books are organized, accurate, and updated all the time.

Let’s get in touch and understand how we can help your business to enhance books credibility.

Frequently asked questions

Is QuickBooks online accessible on mobile and how it’s helpful for construction businesses?

Yes, the App can be downloaded from the Play Store and Apple Store. This feature is specifically essential for construction professionals working in remote sites. The accounting team working in remote locations can post transactions, attach support, and coordinate with the team.

Recently, we suggested the GC team use the mobile and it saved them at least 5 hours of admin work.

Can we integrate QBO with other construction software?

Yes. QBO can be integrated with construction software like Coconstruct, procore, and buildtrend etc. This integration helps ensure project-related finance data like budgets, schedules, and progress invoices are interlinked for accounting and core operational purposes.

Our team helped Miami-based GC to connect buildtrend with QBO and it helped them to reduce manual data entry.

What’s QBO’s dominance in the bookkeeping & accounting industry?

QuickBooks Online (QBO), developed by Intuit, has consistently dominated the market, holding a 63% share of small business accounting software. This market dominance is backed by unmatched ease in terms of user interface and active development team improving the software each coming day.