Common Reports in Construction Accounting

Construction accounting is more complex than regular business accounting. In addition to traditional accounting activities like accounts payable, accounts receivable, and payroll transactions, additional actions are also required like retention, job costing, change orders, progress billings, customer deposits, and more.

Construction accounting cost specifications vary according to the uniqueness of the project. Cost primarily consists of material and labor. Other considerations are required on top of this, including architectural fees and consulting. Indirect costs like supervision, equipment rental, support, and insurance further complicate the construction project’s cost. However, administrative costs are not always charged unless the customer allows them.

What Construction Accounting Reports are Most Common?

For each transaction made on construction accounting, a process called the double-entry method is followed. This method requires two entries to be made on a ledger to record each transaction. As companies grow, this reporting gets confusing and tedious to follow manually, so accounting software is often required.

These specifics require more specialized reports like:

  • Accounts Receivable Aging – This report helps distinguish open accounts receivables based on the time the invoice has been created. This report is helpful to determine the amount owed to your company. The report categorizes open invoices by 30-day segments since the invoice was made.
  • Accounts Payable Aging – This report is the opposite of accounts receivable aging. This report records the company’s bills and invoices and how long it has been since the invoice was created. Accounts payable aging reports are also categorized in 30-day segments.
  • Profit and Loss/Income Statement – Also known as income statement, this report shows the number of revenues and expenses during a particular period. In addition, it indicates how revenue is transformed into net income or net profit.
  • Balance Sheet – This report helps determine the finances of a company for lending and credit purposes. It states business assets, liabilities, and owners’ equity.
  • Cash Balance and Cash Flow Report– As the name states, this report shows the cash received and the cash spends during a designated period. It helps to predict any future needs and as a reference for any business decisions.
  • Job Cost Report -This report shows project progress and billing amounts by providing a breakdown of costs on a project. It can help with insights into production efficiencies, discover missing change orders, and provide data for future estimates. It also provides an analysis of the project estimate cost, actual cost, and projected income.
  • Job Profitability Report – This report analyses the difference between the estimated and actual costs for a project. This report can be run at any time to show how profitable the project is.
  • Earned Value Report – This report is the preferred method for measuring progress in projects. It allows analyzing the difference between estimate cost and actual cost based on the schedule variance.
  • Work in Progress Report – This report is a schedule that includes both in-progress and completed contracts. It determined if the income needs to be adjusted and allows the contractor to monitor how the job is going. While a project is advancing, this schedule should be constantly monitored and adjusted.
  • Estimates vs. Actuals Report – This report shows the budget position of a project by analyzing if the cost is above or below the estimate.
  • Payment Application – This report helps facilitate requests for payment from a client. Depending on the project, the application may require additional documentation.