Construction businesses often find themselves working with accounting software that doesn’t fit the complexities of their work. For example, most generic software doesn’t allow for detailed job costing, which can make it difficult for builders to allocate expenses or accurately monitor project margins. This issue is compounded by the need to manage abrupt order changes, track retainage payments, and handle custom billing methods such as milestone or progress invoicing.

Generic accounting software often integrates poorly with the rest of a construction business’s tech stack. These businesses rely on scheduling, project management, and estimating software, which don’t always sync with accounting platforms. This can force builders to perform duplicate data entry and increase the likelihood of mistakes. Many accounting platforms also struggle to handle the complexities of construction payroll, such as varying labour rates, adherence to union rules, and minimum wage laws.

Builders need software that can handle the unique demands of their industry. As adoption of specialised accounting solutions increases in this sector, the value of the global construction accounting software market is projected to see a compound annual growth rate of 6.9% from 2025 to 2034. Below, we’ll take a closer look at accounting software for construction businesses, including what features this software should include and how builders can use it to track job costs.

What’s in this article?

• What features should accounting software for builders include?
  
• How can builders effectively track job costs using accounting software?
  

What features should accounting software for builders include?

Builders can benefit from specialized accounting software because their financial and operational needs are far more complex than those of many other industries. Standard accounting software often falls short in addressing the specific challenges of construction and contracting. Here’s what specialized software can do for construction businesses.

Costs and profitability

Construction businesses often manage multiple projects simultaneously, each with unique budgets, timelines, and scopes. Specialized software helps:

• Track job-specific costs such as labor, materials, and subcontractors

• Monitor profit margins for each project

• Generate reports to compare estimated versus actual costs for better forecasting

Without these capabilities, it’s easy for costs to spiral or profits to be miscalculated.

Complex contracts and billing

Construction projects often involve:

• Progress invoicing (i.e., sending invoices as specific milestones are completed)

• Retainage management (i.e., holding back a percentage of payments until a project is complete)

• Change orders (i.e., adjusting invoices and budgets to reflect changes in scope or design)

Specialized software can accurately track these variables and integrate them into financial records.

Multiple entities and locations

Builders often run multiple business entities and work across different job sites. Specialized software:

• Helps manage shared resources (e.g., equipment, teams) across locations

• Consolidates financial data across business entities for a clearer financial picture

• Ensures compliance with location-specific tax laws and regulations

Payroll for construction teams

Payroll for construction businesses can be complicated due to:

• Prevailing wage laws for government-funded projects

• Union labor benefits, dues, and compliance

• Variable pay rates for different job types, locations, and hours worked

Standard payroll systems don’t handle these nuances well, but specialized accounting software can.

Equipment and assets

Builders rely heavily on equipment such as trucks, cranes, and other heavy machinery. Specialized software:

• Tracks depreciation and maintenance costs for each asset

• Allocates equipment usage costs to the correct project for accurate job costing

• Helps schedule maintenance to avoid downtime and unexpected expenses

Compliance

Construction is a heavily regulated industry, with strict requirements for:

• Sales tax, use tax, and income tax

• Insurance and bonding compliance

• Audit readiness

Specialized software helps automate compliance tracking, which can reduce the risk of errors or penalties.

Cash flow

Cash flow is notoriously challenging in construction. Expenses often outpace income due to upfront material purchases and delayed client payments. Specialized software:

• Provides real-time cash flow insights by linking costs and revenue to specific jobs

• Tracks retainage and ensures it’s released at the right time

• Helps forecast financial needs based on project schedules

Integration with construction operations

Construction accounting isn’t isolated from operations. Specialized software often integrates with:

• Project management tools for scheduling and progress tracking

• Bid management systems to align project costs with estimated budgets

• Inventory management systems to track materials and supplies

Scalability

As construction businesses take on more projects, standard accounting software can hinder their ability to grow. Specialized software is designed to scale with businesses, supporting:

• Larger teams

• More complex projects

• Expanded geographic coverage

Industry-specific insights

Finally, specialized accounting software often comes with built-in reporting and analytics tailored to the construction industry. This can include:

• Work-in-progress (WIP) reports to monitor ongoing project costs

• Over and under billing reports to identify revenue mismatches

• Project performance dashboards to assess profitability at a glance

These insights help builders make smarter, faster decisions.

How can builders effectively track job costs using accounting software?

One of the main ways accounting software makes a difference for construction businesses is by tracking job costs. If you’re a builder, here’s how to get the most out of this technology’s cost-tracking capabilities.

Set up your projects properly

How you set up a project in your accounting software makes a big difference in your job costing process. Every project needs its own job profile, complete with phases or tasks, such as “foundations”, “framing”, or “roofing”. Then, you need to create expense categories – primarily “labour”, “materials”, “equipment”, and “overheads” – and assign budgets to each of them.

Be specific when entering expenses. If you put all your transactions into a “general” or “miscellaneous” category, for example, you won’t be able to see where your money is going and where you might be overspending.

Enter costs as they happen

Real-time tracking is where accounting software excels. Every expense – whether it’s a batch of timber, a subcontractor’s invoice, or fuel for your equipment – needs to be logged immediately. Most modern software integrates with apps for time tracking, expense management, and in some cases, purchase orders, so that all of your costs are automatically entered into the system as they happen.

Link every cost to the right job

All costs – including labour, materials, and overheads – must be tied directly to the right job. Your software should let you tag each expense with a specific job, including the phase or task it belongs to. For shared costs (such as equipment used across multiple sites), you’ll need a way to allocate those costs proportionally. When done right, this level of tracking ensures nothing falls into a generic, “miscellaneous” bucket.

Use time tracking for labour costs

Labour is one of the largest and often most difficult costs to track accurately. A solid time-tracking system – whether built into your software or integrated with it – makes tracking much easier. Whatever tool you use should capture hours worked, associate them with the right job, and account for nuances such as overtime or different pay rates for specific tasks. Subcontractors’ invoices should also be accounted for and tied to the project they worked on.

Keep track of job cost reports

As you input expenses, the accounting software will create job cost reports that give you a running total for each of your projects, including how much money has been spent against each project’s budget and what has been billed to the client versus what has been earned. These reports aren’t just for looking at costs retroactively – they’re for spotting problems before they escalate. If one phase of the job is already over budget, you need to know immediately so you can take appropriate action.

Don’t let change orders cause issues

Change orders are common in construction, and they’re a major reason projects go over budget. Your accounting software should be able to update both a job’s budget and your invoices as soon as a change is approved. If you’re still tracking change orders manually, you’re likely to experience issues, including potential client disputes.

Factor in retainage and overhead

Retainage (i.e. a percentage of payments that are held back until the job is done) and overheads need to be tracked separately so you don’t overestimate your available cash. If your software can allocate office expenses, administrative staff salaries, or other indirect costs to your jobs, you’ll get a much more accurate view of each project’s true profitability.

Use WIP reports to stay on top of active projects

Work-in-progress (WIP) reports are an important tool for managing multiple projects at once. They show you how much work is completed versus how much revenue you’ve recognised and if you’re over-billing or under-billing for a job. WIP reports keep your financials in sync with your project timelines and can prevent surprises.

Integrate all the tools you need

The best accounting software doesn’t exist in isolation. It should integrate with your project management tools, bidding software, as well as inventory and payroll systems. For example, budgets from your bids should go straight into the designated job you’ve set up in the software, and materials purchased should update both your job costs and your inventory levels. Integration eliminates manual entry and can reduce errors and save you time.

Set up alerts and notifications

Set up automated alerts so your software notifies you when:

• A job is nearing its budget limit

• Labour costs spike unexpectedly

• Payments are delayed

These alerts can help you catch potential issues before they turn into major problems.