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Billing Solutions for Contractors

The right software can streamline billing and keep cash flow steady

By Jeff Copeland, Content Product Manager, Business.com
Look, you didn't get into construction to be an accountant. But you know how critical it is to get billing right so you keep cash flowing and profit margins on target. And if a customer complains about the bill or your accountant needs to run an audit, you know you better be able to see a very clear path back from invoice to original estimate.

Construction billing software can make the whole money train run faster and smarter for you. Some key points to know:

  1. Billing software is available as a stand-alone product but it probably makes more sense to buy it as part of a comprehensive financial management package for your construction business.
  2. You have many choices for billing and accounting software tailored for the construction industry.
  3. Seek advice from IT and accounting professionals to make sure you buy billing software that works with your existing tech systems and financial practices.
Here are the decision points you'll need to consider:

Get a handle on everything that leads up to billing
Billing is the end result of a chain of financial decisions that started with a job cost estimate.  Look at your decision on a billing solution as an opportunity to control costs and improve profitability through better process management back through the chain.
 
Understand your billing format needs
Construction billing formats range all over the map so understand what you use and what your customers expect.  How much of your work goes through progress billing and how much goes through unitary billing?  Do your customers require retainage?  Are you using time and materials or cost-plus?  Are you typically working against draws?  You'll be looking for a software package that speaks your billing language.

Simplify your billing process
Software should be all about saving you time and effort, right?  So note all the annoying little steps, the switching back and forth between spreadsheets that you now endure, and look for software that will automate them. COINS Construction Billing, for instance, can calculate invoice amounts automatically based on multipliers or materials price markups or billing rates and set caps or "not to exceed" amounts.  It can separate out change orders from the base contract and track and bill for those.  If you are filling out American Institute of Architects contract documents job by job, you'll be happy to know that many software packages integrate those industry-standard forms.

Cover the basics for billing software
While you're sharpening the perfect software package for your construction-business needs, don't forget the blunt instrument features you'll need to manage the basics of billing.  We're talking account aging, finance charges, credit limits, sales tax charges, mailing labels and collection letters and other fundamentals — and detailed reports that show how it all adds up. 

Go with what you've got
You may already be running QuickBooks, especially if yours is a small construction business, and there's an argument to be made with sticking with this standby. QuickBooks is very easy for non-digit heads to grasp, it's relatively low cost, it comes in construction-industry specific versions and there are third-party construction-software applications that run off it.  The knock on QuickBooks is that it runs off a one-size-fits-all general ledger accounting model that isn't hospitable to all the quirks of construction billing.  If you do want to go with QuickBooks, you might want to pop for a specialist to set it up for you in line with a builder's special needs.  Another compatibility play:  Sage, maker of the popular Peachtree small-business accounting software, also makes Master Builder and Timberline construction software.

Get industry-specific solutions
Are you a left-handed dyslexic plumbing contractor?  OK, maybe there isn't a construction software package tailored just to you, but there must be one for darn near everyone else. We've seen specific editions that can handle billing for plumbing, electrical, HVAC, residential, and the heavy/highway crowd among many others.

Pay attention to platforms
The last thing you want is to buy a construction billing management software package that can't talk to your project management software or other systems. That's probably what you've got going on now, right?  Finding software that runs on the same operating system (example: Windows) and database platform (example: SQL Server) that you currently run is the best way to make sure that all systems play nice.  Get an IT specialist involved in the decision.

Jeff B. Copeland is a content specialist at Business.com, where small businesses find solutions in more than 65,000 business categories.

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