In construction, change is a way of life. Very rarely does a construction project go from beginning to completion without changes to the original project. The challenge all contractors face is ensuring that when changes in the project do occur, they are properly recorded and billed to the client.
Traditionally, paper was the main way of tracking and billing change orders. With the emergence of construction accounting software, tracking and billing change orders has become much easier. Construction firms expose themselves to great risk if an efficient method for tracking and billing change orders is not in place.
Missed Bills
The biggest reason efficient change order management is crucial is to ensure all work is billed. While major changes to a project can be accounted for, there may be dozens of smaller items that slip under the cracks. If a contractor quickly performs extra work, he may forget to submit the change order. The billing office would not know that extra work was performed, so no bill would be sent. When contractors absorb the cost of extra work and then bill afterwards, they may end up losing some of their already slim profit margin on the job.
Clutter
There is also the difficulty of maintaining paperwork associated with change orders. Unless a comprehensive cataloging method is in place, tracking down change orders from past jobs can be tedious and time consuming. Construction accounting software provides a central hub for all change orders to be tracked and billed – especially important for contractors performing multiple jobs simultaneously. Once a change order is signed and approved, it is entered into the system.
Instant Job and Billing
When the change order is uploaded into construction accounting software, the figures are automatically factored into the job for cost and billing purposes. If the change order has not yet been approved, the amount will not be factored into the job but still be recorded into the system. Having all of these calculations done instantly save contractors time and ensures accuracy. When the change order is approved, the bill can be sent to the customer, just like any other invoice.
Mobile Change Orders
It’s one thing to track and bill change orders, but ensuring that all change orders are recorded in the first place is something construction accounting software can do as well. Usually offered with construction accounting software, mobile apps allow contractors to track change orders in the field. Contractors can create a change request, capture the customer signature and then send the singed slip directly into the system. This ensures that all change orders are recorded and sent into the system for billing. Paper is eliminated, and the change orders can be pulled up instantly.
Construction accounting software provides contractors with the knowledge that all of the work performed on a job is properly tracked and billed. By centralizing and integrating information, construction accounting software makes managing easier than ever. The risk is greatly reduced and most importantly, contractors can stay on top of billing so that WIP reports continue to be favorable.
