Charge cards, also called purchase cards, are a convenient way to pay for costs on a construction project. MX Build’s purchase cards come with a proprietary dashboard that allows you to track your budget, set spending limits, and manage costs. We’re going to look at seven ways contractors can use charge cards to improve financial efficiency.
1. Use software to manage your budget
The old way to track a project budget, which many contractors still use, is a spreadsheet showing the budget and costs. This requires manual transfer data from the accounting software to the spreadsheet, which could lead to number transpositions and data errors.
Not only does the use of spreadsheets carry a high potential for mistakes, but they also tend to fall behind in terms of being kept up to date. Managers often find themselves waiting for card statements and invoices to arrive and then manually enter the data to update the costs. This process can be time-consuming and prone to errors, leading to delays in obtaining accurate financial information.
The new way to manage a project budget is to use software that automatically pulls costs in from accounts payable and card charges, like MX Build. This reduces the chance for errors and ensures that costs are always up to date. Project managers can use the software to actively manage the budget, run reports, and always know what their current costs are.
2. Show all costs in one dashboard
Having all job costs, including accounts payable and card expenses, in one location makes reviewing the budget simpler and easier.Estimators don’t have to look in three places to get their total costs. They just look at the dashboard and know exactly where they are. This view also allows them to see costs as they come in, in real time, not just at the end of the month.
Having all the information they need in one place allows project managers to manage their budgets proactively, instead of waiting for reports and then reacting when items are over budget. They can work with the field to make budget adjustments or reallocate costs to get a true picture of where the project budget is at.
3. Assign charge cards to budget line items
With MX Build charge cards, you can assign field and virtual cards to particular budget line items and have all the costs for that item together. Field cards are physical cards issued to workers who often make purchases. Virtual cards are card numbers that are used one time for specific purchases. Each card can be assigned to a specific budget line item with as pending limit equal to the budget
By assigning cards to each budget line item, estimators can track the progress of the project, pay for their materials, monitor the budget,and control spending. Limits provide protection against going over budget.
4. Real-time reporting and data
Our card portal allows project managers to see their expenses versus the budget, so they know immediately when they’re over budget on a line item. Purchases are immediately shown on the dashboard as soon as they are processed. If an item is getting close to its limit, managers can contact the field to see why expenses are up. The real time data goes into specifics about whether it’s a change in work or unforeseen conditions. The budget for that line item can be quickly and easily changed through the portal.
5. Adjust the budget or cost allocation
When a budget line item is nearing its limit, project managers can reallocate costs or increase the budget for that item. Both can be done easily through the charge card portal. This allows project teams to have the flexibility they need to address changes in the work as they occur. As we approve new work, we can easily raise limits to reflect the increasing costs. Additionally, we have the flexibility to allocate costs to another budget item as needed.
6. Pay all your bills in one place
With the MX Build card portal, you can see all your costs in one location, including subcontractors and suppliers. The portal integrates with many accounting software packages, allowing for direct information exchange without worrying about errors. Billing is much easier when all costs are in one spot. With the ability to view all information at once, managers can effortlessly determine the amount owed each month. This empowers them to have an instant overview of the financial situation, without the need for tedious manual calculations or data entry.
Both subcontractors and suppliers can be paid from the same dashboard. You don’t have to rely on paper checks getting lost in the mail anymore. The dashboard sends bank transfers to pay for card purchases and pay subcontractors, ensuring payment in 1 to 2 days.
7. Gather compliance documents
By paying subcontractors through our portal, it’s easy to exchange payment for lien waivers and other documents. The portal facilitates the collection of waivers and makes it easy to track outstanding documents. The waivers are sent to the subcontractor for electronic signature, making document gathering quick and easy. This said, the collection and attachment of compliance documents is direct to the invoices. All in all, the process of finding and accessing these documents is more simple and easy than ever.
Manage costs better with purchase cards
Contractors can better manage and limit job costs with field and virtual charge cards. The ability to apply controls as needed to limit spending and keep projects on budget leads to greater profitability. MX Build’s cardportal allows contractors to manage all their costs and payments, including subcontractors. To schedule a demonstration of our cost portal, contact us today.