Contracting accounting is more complex compared to other commercial sectors, given the nature of long-term projects and the multiplicity of their line items and payment stages. This article covers the main challenges of contracting accounting and how Riv-ERP provides practical solutions for them.
Key Challenges in Contracting Accounting
Multiple Projects and Subcontractors
Contracting companies need to track the cost of each project separately, while managing dealings with several subcontractors at once.
Percentage-of-Completion Calculation
Calculating revenue based on project completion percentage is one of the most complex accounting processes in this sector.
Managing Progress Payments
Tracking periodic progress payments and ensuring they match actual work progress requires high accuracy to avoid financial disputes.
Tracking Material and Labor Costs per Project
Without a unified system, it’s difficult to know the actual cost of each project precisely, which affects the calculation of true profitability.
How Does Riv-ERP Solve These Challenges?
Independent Cost Center for Each Project
The system allows creating a separate cost center for each project, so all related revenues and expenses are tracked accurately.
Automatic Percentage-of-Completion Reports
Riv-ERP calculates the completion percentage and revenue due based on entered data, without needing complex manual calculations.
Electronic Progress Payment Management
Periodic progress payments for subcontractors and clients can be issued and tracked directly within the system.
Linking Material and Labor Costs to Each Project
The system allows recording the material and labor costs associated with each project separately, to know actual profitability accurately.
Conclusion
Contracting companies need an accounting system specifically designed for the complexities of this sector, and Riv-ERP provides these integrated solutions to help contracting companies manage their projects with greater accuracy and transparency.
