Signs You May Need to Upgrade Your Accounting Software

Not getting the information you need from your construction accounting software? Have you outgrown your software? How would you know if you did? And how do you start the search for the right software to replace it? Let’s talk about it all on this week’s episode.

Topics we cover in this episode include:

  • Are you having trouble integrating with other products?
  • Are you doing things manually that could be automated?
  • Is your software customized to the information you want?
  • Where to start when searching for a new accounting software solution
  • Will your software be scalable in the future?
  • What are the costs associated with implementing the software, and is there ongoing support? 


Join the conversation on our LinkedIn page:

Wade Carpenter, CPA, CGMA |
Stephen Brown, Bonding Expert |


[00:00:05] Wade Carpenter: Not getting the information you need from your construction accounting software? Have you outgrown your software? How would you know if you did? Come on in, let’s talk about it. This is the Contractor Success Forum. If you’re new here, I’m Wade Carpenter with Carpenter & Company CPAs. With me, my co host, Stephen Brown with McDaniel, Whitley, Bonding Insurance.

Stephen, what are your thoughts on this, accounting software?

[00:00:26] Stephen Brown: My thoughts are, is extremely important. And the wonderful thing is you’re going to answer all these questions. So this is a great topic. Thanks, Wade.

When do you need to replace your software? When is your software not performing? What kind of frustrations are normal in learning a new software system? And what are abnormal?

Can you take us through all this stuff?

[00:00:49] Wade Carpenter: We’ll give it a shot. I think one of the things that we’ve gotten a lot of the comments on some of the shows, when we talked about things like QuickBooks and different software. Number one, we don’t try to push any particular software, but I’ve been asked in things like the YouTube comments, what should I be using?

And there is no hard and fast rule because it depends on the facts and circumstances. It depends on your industry, your size, the number of jobs you do, the size of jobs you do. There’s a lot of things that go into it. And I’m not trying to suggest any particular software today. I just want to raise the question that if you’re not getting the information you need out of your accounting software, do you need to change your software or do you need to change your system?

[00:01:36] Stephen Brown: Yeah, sure. Is it your fault or the software’s fault that you’re not getting the information you need?

[00:01:41] Wade Carpenter: Just to kick that off too, accounting software is tough enough, but construction adds several things to it. If you’re trying to do job costing, if you’re trying to get. A cost structure. If you’re trying to do cost accounting at the account level, it’s one thing.

If you’re also trying to add in like cost code structure, like we’ve talked about on a couple of podcast episodes, that’s even another area where you’re just trying to do something beyond a normal accounting system.

We see it all the time, these accounting software salesmen will promise the world. And it’s not that their software can’t necessarily do the job. It’s more of, they don’t have the system set up properly to do it, or the people don’t have the proper training to get that set up.

[00:02:25] Stephen Brown: Sure. And Wade, in the early years, maybe it’s just my imagination, but a lot of software for the construction industry was coming from construction oriented accountants like yourself, that had to develop their own software to get the job done for their customers.

[00:02:41] Wade Carpenter: Yeah. One of my clients that has now retired. actually is one of the ones that actually built what became Timberline. And he was a contractor himself. He wasn’t the accountant. He was a contractor that said, I need a better system. I need to be able to do percent complete and really stay on top of my jobs.

And you’re absolutely right. A lot of times it’s the CPAs or the contractors that have the resources to be able to do that.

[00:03:08] Stephen Brown: And also I might add, the familiarity with the specific software product. I don’t know how possibly you can keep up with all the different softwares that are out there.

[00:03:20] Wade Carpenter: To be practical, you can’t. If you get into people that work with construction software, you find specialists. And they do usually cost more money to get training. But to get it set up right, you really sometimes do need that level of expertise, because something like QuickBooks, maybe you can jump in and figure out some pieces of it. But a lot of non construction CPAs have trouble setting up QuickBooks,

[00:03:47] Stephen Brown: Sure. I can refer our listeners to another recent email on setting up your cost codes properly. There’s a lot to it, Wade.

[00:03:55] Wade Carpenter: So I guess I’m not sure we’re going to solve all the issues today, but I just wanted to talk about some of the things where, is it time to upgrade your software? Is it time to think about your systems or even your people, if they’ve got the right capacity to do that, or do they just need training? So let’s just talk about the software to begin with, if that’s okay.

[00:04:16] Stephen Brown: All right.

Are you having trouble integrating with other products?

[00:04:17] Wade Carpenter: So a couple of the signs it may be time to upgrade. Are you having trouble integrating with other products out there? There’s a lot of systems out there that have been desktop based for many years. And I hate to say QuickBooks Online is they’ve really pushed everybody to the online product.

And there are some, I’m not trying to pick on that. A lot of the bigger softwares are hosting their own. What I wish, and many accountants have wished, that Intuit hadn’t completely redone their software, their desktop product software. If they had just figured out a hosting model that would, work with the desktop product, it would have made a lot more people happy.

But there are some things to be said with the integration issues. If they can work with other software, especially cloud accountant software, where they can do things like talking to banks or talking to your customer relationship management software, or estimate some of them have outside estimating software.

Some of them have, I call them like sales order type tracking software. There are a lot of different things that could play into it, and the more they can talk to each other, that’s one of the things.

And if you’re having to do a lot of manual things between multiple systems, or if you’re, this is a classic thing, but if you’re still getting your job costs and creating it manually on an Excel sheet, then maybe it’s time to think about something different. In that case, it may not be your software. It may be setting up your system properly.

[00:05:51] Stephen Brown: Okay.

Are you doing things manually that could be automated?

[00:05:52] Wade Carpenter: Other things I see, there are manual data entry errors. And sometimes we can pull in transactions. There’s pros and cons to that, that I’ve talked about with these bank feeds.

But there are sometimes transactions like accounts payable now that can be pulled in and you don’t have to rekey them. And you’re saving that manual data entry.

Timesheets. If you’re tracking time and trying to get that into your software, all that stuff, if it’s not integrating properly, then maybe it’s time to look for a different product that might do that for you.

[00:06:26] Stephen Brown: Okay.

[00:06:27] Wade Carpenter: Again, this goes back to the cloud versus desktop software and a lot of times you can host a desktop product, but does it have real time data access? Because what I love to get from my contractors is access to their cost information so they know where they are at any moment’s notice. So can you get that real time data access you need to really run your business properly?

[00:06:52] Stephen Brown: Sure, and is it safe?

[00:06:54] Wade Carpenter: We would hope so. They’ve done a lot with the encryption. And a lot of financial software are going to have at least 256 bit encryption nowadays so that shouldn’t be a problem. But yes, you always should think about the safety of those.

Is your software customized to the information you want?

[00:07:09] Wade Carpenter: Customization too, and sometimes this gets into, there are construction accounting products out there that are built for, or add on products that are built for specific industries. And some of them are just canned and you can’t customize it to what you need. So just thinking through, can you customize it to get the information you want? That’s just another factor that you may want to consider in whether you need another software.

[00:07:40] Stephen Brown: Okay.

[00:07:40] Wade Carpenter: Again, I talk about this all the time, but functionally what are you trying to get? What kind of triggers an upgrade? Maybe you’ve grown to the next level, or maybe you’ve experienced that really bad project where you didn’t know things were going wrong until it went really wrong and really took out your company.

You’ve probably seen that too.

[00:08:00] Stephen Brown: Sure.

[00:08:00] Wade Carpenter: Is it time that you got a little more advanced job costing? Is it time you got some better enhanced reporting? Weekly job reports. One of the other things, like, committed costs. Or I say purchase order systems and committed costs and stuff like that.

Sometimes purchase orders are a dirty word for a lot of my contractors. But, having that control over knowing whether you’ve spent that money or, have committed that money can go a long way.

Where to start when searching for a new accounting software solution

[00:08:27] Stephen Brown: Sure. Let me ask you this question. Kind of ties to what you were just talking about. What is the general rule of thumb for how much the software should cost what’s reasonable, versus what you want to do. You have to perceive the value of it.

And the software company sales people are there to sell you on the value of the product. This product is going to make you money and save time and efficiency and so forth. But beside talking to other contractors about what software they use and whether they like it or not, what’s the best way to sort through all of the the fluff and get to the point and purchase what you need?

[00:09:07] Wade Carpenter: Exactly what you said. Talking to others, if you’re in a trade association, talk to others that, what are they using? For a lot of products like–

[00:09:17] Stephen Brown: And how proactive are they about upgrading things to make their software evolve into what more of their customers are asking for?

[00:09:25] Wade Carpenter: Yeah, absolutely. Again, talking to other people that have used it or, having them talk to past customers. A lot of times there’s online reviews for almost anything nowadays, but some of the construction accounting softwares, those products are not as readily available.

They don’t really publish the pricing. You end up having to go talk to a software salesman and get a demo and go through all that. You don’t really know. And so number one, talking to other people.

Or, maybe once you start down that road with a particular software, talking to the people that, they’re probably going to hold up the ones that are their success stories. But you can also ask them, what kind of things did you run into in implementing this?

[00:10:11] Stephen Brown: Yeah, a great source is when you’re at your trade association talking to other like minded contractors. The CFMA is a good source, Construction Financial Management. What are you using? What do you like about it? What you don’t like about it?

Because, It seems to me, Wade, and maybe I’m wrong, but when you are interested in a software, first of all, you can’t even play around with it until you’ve given them all your information and made yourself accessible to a salesperson.

And then as that salesperson is doing the demos for you, it certainly looks good. It’s slick, but is it easy to use? And is it going to get the job done? And do I understand everything they’re saying? And can I push them to show me more of the exact features that I want to know about? And are they capable of knowing how to access those features?

[00:11:02] Wade Carpenter: Yeah, absolutely, that bright shiny objects syndrome, or you go look at that new car. Hadn’t done your homework on it, you just got a slick salesman and they just really want to drive out with that new car, new pickup truck, whatever it is.

Contractors go to these trade, association meetings or convention with the software vendors and they buy stuff right then and there, but maybe they should talk to their CFO, controller, accountant, about that. Because a lot of times they don’t know what’s really involved in that.

And since we’re talking about that, again, does your, I hate to say your, we see it all the time, your spouse, your wife, are they doing the books? Have they got any kind of training whatsoever? Or did you just throw them into the situation? Or did you throw out an ad and get a bookkeeper that said they were a bookkeeper, but they have no practical experience?

[00:11:54] Stephen Brown: Yeah, throw your spouse into that difficult situation and then change software on them without telling them and see what happens.

[00:12:01] Wade Carpenter: I don’t know if that would go over very well.

[00:12:03] Stephen Brown: It’s a lot of fun, I’ll tell you.

[00:12:05] Wade Carpenter: Yeah, but sometimes that’s a different show altogether, but.

[00:12:09] Stephen Brown: No, but all of this ties in. When should you replace your current software again? We were talking about that. You mentioned when it’s not performing the functions you need it to function. When you’re doing things manually that should be automated, what other stuff do you look for? The security, we talked about that.

[00:12:28] Wade Carpenter: And that’s, that is something that, is it complying with what you need? And it’s absolutely something you should pay attention to. Just using the same analogy with trading in your software, I guess you could also be at a point where you need to trade in your bookkeeper. And if your bookkeeper is your wife–

[00:12:45] Stephen Brown: –is your wife, yeah, you can’t do that. And —

[00:12:47] Wade Carpenter: It gets expensive. That’s probably gonna cost you more than the software, but.

[00:12:51] Stephen Brown: No, I did have a customer whose wife passed away, and because he was used to having a wife, he married his bookkeeper and accountant. three months later.

[00:13:02] Wade Carpenter: Just to save on accounting fees?

[00:13:04] Stephen Brown: No. She actually, after he married her, she assigned the account to someone else and got completely out of it.

[00:13:11] Wade Carpenter: Oh, okay.

[00:13:12] Stephen Brown: I’ll be your accountant or your wife, but I won’t be both. And it worked out beautifully.

[00:13:16] Wade Carpenter: All right. Let’s continue back with the software thing.

Will your software be scalable in the future?

[00:13:19] Wade Carpenter: Going back to that software, depending on if you’ve outgrown your software or whatever, but thinking about where you’re growing into, and is that software going to be scalable for you? Is it going to be what you need two years down the road, five years down the road, 10 years down the road?

You can’t always predict that. And, but is it going to scale to what you need or are you going to have to replace it again in two years, three years? Because it is a heavy lift. Sometimes you’re going to completely change and learn a software product.

I’ve been around accounting software products, and usually you can find your way around the reports, but actually the day to day scale, you know, doing those kind of things, there is an art to it. And there’s some training that, you just can’t pick up one and jump to another. Just get, the rules.

[00:14:07] Stephen Brown: Yeah. It doesn’t flow in a way you can understand.

Is your accounting software efficient?

[00:14:10] Wade Carpenter: Just some other practical things to think about.

Is your software right now efficient? We talked about are you manually keying things, but are the operations the things that it does for you, are you doing all these things manually? Does it have things like where we can attach files, or accounts payable images or receipts?

Some of those things where, you have a filing system tied into it can make it a lot more efficient and I don’t want to go too deep into that, but being able to automate that, that’s one of the things that I did many years ago with going paperless. And there’s so many contractors out there that still have way too much paper and they’re tied to paper and it’s hard to get turned loose of. But it makes you very inefficient a lot of times.

Is your acocunting software providing the insights and reporting you need?

[00:14:57] Wade Carpenter: Are you getting the insights, the forecasting, the reporting you really need out of it? Is it even capable of it? And some of these new products have some nicer reports. There’s some that I’ve been working with and actually working with a couple of developers working on AI predicting cashflow. And a lot of that’s getting better and better. And it’s amazing. Where you can get these insights a lot easier. It is one thing to have a good report that shows here’s your job cost. But it’s okay, is if you can see graphically is this, are we getting outta whack or is it just, is this slightly or is, are we completely getting off track?

A lot of those insights are getting built into these newer softwares today, and it’s pretty amazing to me.

[00:15:43] Stephen Brown: Including all your estimating and your historical data.

[00:15:48] Wade Carpenter: Yeah, using that is a predictor for some of these things I saw. It’s great to have that and seeing if you are getting off track. A lot of times that could say hey, maybe the landscape changing, COVID changed a lot of the pricing structures or a lot of construction industries, trades.

Accounting software pricing: what to expect

[00:16:05] Wade Carpenter: You brought up earlier, what does it cost for the software? And that can vary widely and they continue to go on up. 20, 30, 40, 50 thousand and more up front can easily happen for better software. So you definitely don’t want to make a mistake, or as best you can make sure that you’re not jumping in with both feet into something that’s not going to pan out for you.

But you also have to look at is this a subscription? Most of them are going to be subscription. There are a few out there that you can still buy once, but they’re getting fewer and farther between.

[00:16:39] Stephen Brown: And if you buy them once, they’re not going to adapt as well as something you subscribe to, right?

Is your accounting software being continuously improved?

[00:16:45] Wade Carpenter: Right. You would think, as long as they’re updating the software. And that is another thing on my list, are they continually improving the software? I don’t want to use any names, but there have been a few people in this industry that have bought software products, and they don’t really do anything to it.

It’s just another level of, they have different pricing points for different softwares, and so a lot of these lower end softwares, they’re not really doing things to really improve after a certain point.

[00:17:14] Stephen Brown: You’re getting what you pay for.

What are the costs associated with implementing the software, and is there ongoing support?

[00:17:16] Wade Carpenter: One of the other things, we already brought up, but the implementation costs. And I got a good friend that has done a lot of software implementation. She’s a specialist in this, and, more of the higher end systems. And her rule of thumb is, it’s usually going to cost, you She says two to three, but a lot of times it’s three times the cost of the software to get it implemented properly.

And a lot of people don’t think about that when they get going. And they just think okay, the software says they’re going to help me. The support people will help.

But they’re not going to help you create this cost structure and you don’t have all this stuff. You need somebody that specializes in that particular software, or at least getting that system set up, the base system, so that you can adapt it to a new software product.

[00:18:09] Stephen Brown: Okay.

[00:18:09] Wade Carpenter: And again, once you’ve got training, initial implementation, and you got the cost of the people, sometimes they will have a mandatory fee on top of the software for implementation. But does it have good ongoing support? Are they regularly upgrading, which we’ve already said?

Will you need to upgrade your hardware to support the new software?

[00:18:28] Wade Carpenter: So again, what are the other additional costs you haven’t thought of? And, just sort of a blanket thought here too, especially if you’ve got desktop software, do you need a new server to run that particular software? They’re taking more and more memory and hard drive space. Does your current setup have what it needs to pull that new software?

So a lot of these things people will get into, they go buy this at the trade show and then, oh, okay we got to add this on, we got to add this on. Or they don’t get the proper training and two or three years later, they’re still like, okay we’ve already put some money into this, I can’t cut it off now because we’ve sunk so much cost in it, but you’re not any farther along than when you started. That’s my general list.

[00:19:15] Stephen Brown: Now that’s a good list. You could listen to this podcast and make a pretty good checklist of things to consider, just from what we’ve talked about so far. You’ve brought up a lot of things. I brought up a couple of things. But, it’s an important decision and there’s just a lot going into it.

And I would also go ahead and say, if you’re running the construction company, you don’t have to be an accountant to understand what features are available and get reports from your folks who are receiving the training. Every day, they, what did you learn today? What does it do? What do you like? What do you don’t like?

So you can run interference. You don’t have to be an expert to be the leader in this. But what you’re showing the folks that are forming these tasks for your company is that I support you and I understand what you’re going through and we’re going to get through this together, and it’s going to be good for all of us.

You have to be a coach and cheerleader as well, don’t you?

[00:20:12] Wade Carpenter: And I’m not going to kid you if you’re listening to this, I’m not an expert in every software product out there for construction accounting. And I don’t know that anybody actually can be because there’s so many of them. There’s quirks to all of them.

[00:20:25] Stephen Brown: And I confess that I’m not either.

[00:20:27] Wade Carpenter: But what I do hope is that you do your homework on these things. I appreciate any feedback that people have had, or if you have seen the costs, my rule of thumb, is that accurate? How much did you actually spend in converting your system? Did you ever have it set up properly?

We want to hear some comments. If you would, share them with us.

[00:20:47] Stephen Brown: The key sales pitch is going to be how many man hours you’re going to save with this software. Am I crazy? I’m thinking of it from the salesperson’s point of view. I’m thinking if I’m at a trade show and you drop by my booth, what am I going to do to get that software sold?

So be prepared for that.

[00:21:05] Wade Carpenter: On that note, I think we’ll go ahead and wrap up. Thank you all for listening to the Contractor Success Forum. Check out the show notes at ContractorSuccessForum. com or the Carpenters CPA’s YouTube channel for more information. We would appreciate it if you would consider subscribing, like the video, follow us every week as we post a new episode, and we will look forward to seeing you next time.