Getting The Most from Payroll?

Managing payroll can be notoriously complex in construction. Variable locations, crews, schedules, pay rates, and deductions tend to make payroll more time consuming (and frustrating) in construction than in other fields, making it vital for construction business owners to have payroll services and software tuned into their particular needs. If you find yourself struggling with spreadsheets and outdated systems, it may be time to re-think your approach. Ideally, your payroll should not only run efficiently but easily yield data that can inform your business decisions. Read on for tips to ensure you are getting the most from your payroll.

Payroll Software Should Be Doing the Heavy Lifting

Construction Business Owner, John Meibers, the vice president and general manager of Deltek ComputerEase, reminds us that we deserve a lot out of our payroll system, observing, “The complex nature of construction payroll makes it difficult to reduce errors and comply with state and federal regulations without the use of construction software. Software allows contractors to easily manage the complexities of payroll while remaining in control. Contractors maintain approval rights but alleviate themselves of the burden of double data entry and tracking tax filing deadlines.” Ideally for example, the right payroll software should be helping you to:

• Automate manual processes: Construction payroll software automates processes that you would otherwise have to input on spreadsheets and other clunky systems. It easily allows you to maintain compliance so that you don’t have to comb through each individual payroll calculation and make lists of jurisdictions, employees and states. Automated timekeeping can reduce admin and labor costs by ensuring accuracy and verifying that employees are on location for work.
• Manage cash flow: Small construction businesses often face cash flow challenges. Construction software can eliminate the need to sift through spreadsheets to track down individual records and transactions. It can also provide real-time tracking that allows you to address cash shortages, make payments and budget.
• Enhance visibility: Construction payroll software enhances the visibility into your business, allowing you to manage workforce time and access real-time dashboards and fast, custom reports — anytime, anywhere.
• Save time with one partner: When your construction accounting software and your payroll provider is the same company, you can save time and simplify entries with just one software, removing the need for double data entry and eliminating redundancies.

You should also be able to count on your payroll service to easily generate needed reports and routinely arm you with data that helps you better run your construction business. As Meibers points out, you should not have to “memorize every local, state and federal requirement,” because your payroll service should be seamlessly handling that, and providing you with plenty of useful reports, such as: 

• Job costing: Job costing accurately tracks all costs associated with a job, including labor, materials and overheads — allowing companies to make reliable estimates of said costs.
• Job labor: Job labor reports summarize the total hours (including overtime) and labor costs on each job.
• Job hour variance: Job hour variance reports contain estimated hours and costs versus actual hours and costs of your business’s labor. Typically, they summarize by job but, if necessary, can go into more detail, like comparing actual to estimated cost and hours for each type of work, and comparing actual to estimated hourly labor rates.
• Workers’ compensation: Each state has its own laws for workers’ compensation requirements, and typically, construction businesses have stricter requirements than others. It is the company’s responsibility to submit the workers’ compensation payroll report, and particular payroll reports are needed if you are going through an audit.

If you find yourself wondering whether your current payroll set-up is doing the maximum possible to help you run your business ever more efficiently, Meiber recommends clarifying your needs and exploring new approaches, following these pointers: 

• Assess your payroll requirements: Make a list of everything you need the software to do. This could include accounting for seasonal workers, unions, the number of employees, multi state/multi locality/multi job processing and pay slips, for example.
• Maintain compliance: Any worthwhile payroll software will help to ensure that you remain compliant with state and federal regulations while remaining user-friendly and accurately delivering payroll on time.
• Compare features: Different payroll systems will vary in their features and functionality. This is another reason for assessing your payroll requirements above. Defining the features you need, such as job costing, will make it easier to compare different software and select the best one.

Good To Know: Incentive Compensation?

With a smoothly running payroll operation in place, construction business owners can turn attention to another big challenge: building and sustaining a talented team. Toward that end, business coach George Hedley advises developing a well thought out incentive compensation approach that ties performance to the specific targets you are focused on achieving, and offers these specific examples of on budget and under-budget completion incentives:

• On-budget completion — Upon project completion, share 2.5% of the total crew hours with the foreman and crew when jobs are completed on budget and without accidents. You may also include other project players, including the project manager, general superintendent, general foreman, job superintendent, estimator and project administrator in this type of plan.
• Under-budget completion — Share 20% of the total crew hours saved with the foreman, crew and other players when jobs are completed under budget and without accidents.
• On-budget and on-time completion — Share 2.5% of the general contractor fee (overhead and profit) with the project manager and job superintendent when jobs are completed on budget, on time and safely.
• Under-budget and on-time completion — Share 20% of the additional general contractor fee (overhead and profit) with the project manager and job superintendent when jobs are completed under budget, ahead of schedule and safely.

Time To Team Up?

Effective teamwork is the secret sauce of most success stories—and Colonial Surety Company is here to help you succeed. Our Hometown Bond Program helps local builders get credit based underwriting bonds for up to $250k—no financial statements required.  

Growing from there, construction business owners can get in on more action by qualifying for The Partnership Account® for Contractors. Once qualified, you’ll use our power of attorney to issue your own bid bonds, in minutes. Order performance bonds with speed and ease too. Plus, you’ll bid and win more than ever as you leverage your:

• surety line of credit—in writing
• private digital dashboard
• daily snapshot of single and aggregate limits 
• ability to update work on hand

Surety Bond programs for construction businesses of every size are right here: Bonding Programs at Colonial Surety Company

Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.