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A Guide To General Ledgers In Residential Construction 

What Is General Ledger? 

A general ledger is a recordkeeping system that lists and sorts all of a company’s financial transactions. The ledger is organized into separate accounts that include assets (fixed and current), liabilities, revenues, expenses, gains and losses. Ultimately, the information in the ledger can be summarized in financial statements —  balance sheets, income statements and cash flow statements — that give you an overview of the financial health of your business.

General ledgers use the double-entry accounting method. This means that every debit on one account should be balanced by a credit on another account. The sum of debits should equal the sum of credits at all times.

How Is A General Ledger Used In Residential Construction Accounting? 

A general ledger is used in residential construction accounting to record accounts payable, accounts receivable, payroll, inventory, equipment, loan debt and payments, interest revenue and gains and losses on sales of assets. 

Many home builders also incorporate job costing into their construction general ledger system. Job costing — allocating expenses to individual projects — is a complex task. Every expense must be tracked, recorded and defined to determine how much finishing a project costs your company. Job costing enables you to determine the types of jobs that are actually profitable for you and focus on bidding and winning those jobs. It can also help analyze why certain jobs are not profitable and where you need improvements — in your processes, purchasing, workforce, etc.

In general ledger accounting, each transaction can be categorized by project, phase or cost code. Since transactions are recorded in real-time, keeping a general ledger can help you catch jobs in progress that are heading for a loss and make adjustments to stay in budget.

Reasons To Use A General Ledger In Residential Construction  

A construction general ledger can benefit your business by:

  • Providing an organized, accurate record of all financial transactions
  • Ensuring your books are balanced
  • Spotlighting discrepancies and unusual transactions to reveal errors or fraud
  • Helping you can stay on top of spending and cash flow
  • Easing tax return preparation with organized information
  • Gathering information for key financial statements
  • Helping you track profitability company-wide and job-by-job

Overall, a general ledger can provide insights that help you make better business decisions. In a competitive, tight-profit industry like residential construction, that’s critical to success.

How General Ledger Software Can Improve Accounting Efficiency 

Although it’s possible to keep a general ledger by hand or in a simple spreadsheet, general ledger software can make the process easier and more accurate, especially if it is designed specifically for home builders. It can also speed monthly closings and cut labor costs or free your staff from menial repetitive tasks to work on strategic, growth initiatives.

With the right construction general ledger software, you can:

  • Accelerate routine accounting and reporting tasks
  • Increase real-time visibility — give access to team members who can validate amounts and pinpoint errors 
  • Automatically calculate accruals and interest 
  • Automate tax calculation
  • Produce 1099s and W2s
  • Eliminate data re-entry with integrated accounting functions
  • Track every expense, loan and deposit per project
  • Create custom business intelligence reports easily and quickly
  • Efficiently develop robust and accurate financial statements

Improve Your General Ledger With Hyphen’s BRIX Software & informXL Analyzer 

BRIX is more than a residential construction ERP software with accounting. It’s a fully integrated enterprise resource platform that allows you to access the most efficient solutions available for any size home builder. Already used in many homes across the U.S. each year, BRIX lets you control purchasing, production, accounting, costs and reporting all in one streamlined cloud-based construction program. 

Simplifying and strengthening home builder reporting and data analysis, informXL’s Analyzer is a real-time Microsoft® Excel-based reporting suite that can help you aggregate, evaluate, and report your BRIX data quickly and easily. 

  • Create dynamic Excel-based GL and Plan Budget reports with real-time BRIX data
  • Build ad-hoc consolidated GL balance sheet and P&L reports
  • Work with GL balance and transaction data through a single worksheet
  • Analyze plan cost changes by month, vendor or by sq. ft.
  • Summarize data by company, account, vendor, region, division and area.
  • Generate Excel pivot tables with live online BRIX data
  • Build custom reports, charts and graphs for individual users or entire departments

Interested in learning more about informXL’s General Ledger and Plan Budgets? Schedule a demo to talk to a Hyphen Solutions expert about how adopting BRIX as your home builder ERP software will transform the way your business manages sales, accounting, job costs, purchasing, payroll and more.