Choosing the right accounting software for construction companies can make all the difference when it comes to managing projects, payments and cashflow. We know that builders and contractors face tighter margins and ever-shifting deadlines, so having an efficient system in place is vital for staying profitable. With the 2025/26 tax year on the horizon, it’s a good time to review your current setup and ensure your accounting software has all the features you need to keep your finances on track and your projects moving.
Below, we break down the key features construction firms should look for in an accounting solution and explain why these tools matter. We’ll also share a few helpful statistics and resources, along with tips on maintaining healthy finances. At our practice, we see how the right software not only helps with day-to-day tasks, but also keeps you prepared for shifts in tax rates, additional reporting requirements and changing market conditions.
Project budgeting and job costing
Construction projects often involve numerous jobs running at once. There are subcontractors to pay, raw materials to source and clients to invoice. Accurate budgeting and job costing prevent overspending and keep each job profitable. Look for software that lets you assign costs directly to projects, track progress against estimates and instantly see if you’re hitting or missing profit targets.
According to the House of Commons, the construction sector contributed around £117bn to the UK economy in 2018, so it’s clear that new-builds and refurbishments play a significant part in overall economic health. This means that running your individual projects efficiently has a bigger impact than you might think – not only on your own bottom line, but also on the wider sector.
CIS compliance
If you fall under the Construction Industry Scheme (CIS), having software, such as Xero, that handles CIS is essential. The right program calculates the right deductions for subcontractors, helps you file returns and automatically generates statements. CIS reporting is one area where manual errors can lead to penalties or delays. With built-in CIS tools, you’re less likely to miss deadlines and more likely to keep everyone paid correctly.
VAT tracking for the 2025/26 tax year
The VAT threshold is set to remain at £90,000 through the 2025/26 tax year. It’s worth remembering that if you’re registered for VAT, you’ll need to keep detailed records of all your sales, purchases and the VAT you charge or pay. Software that automatically calculates VAT (including reverse charge for construction services) will cut down on admin and ensure you file returns on time.
Since the government introduced Making Tax Digital (MTD), businesses have been encouraged to keep digital records and submit VAT returns through compatible software. In the construction sector, where numerous transactions may happen in quick succession, a streamlined VAT process frees up time for site visits and client communication.
Real-time financial reporting
Many of us have grown used to waiting for monthly statements or quarterly reports. But modern accounting software lets you pull up real-time data – so you always know if there’s enough money in the bank to cover materials next week or whether a client payment is overdue. For construction projects, real-time reporting helps you foresee shortfalls, balance your budgets and address problems early.
This is especially useful now that material costs can vary from month to month. Being able to check current outgoings at the click of a button can lead to faster decision-making and fewer delays.
Payroll integration
In the construction sector, your workforce might include a mix of temporary, full-time and self-employed subcontractors. Each group has different payroll requirements. Some might need the usual PAYE and national insurance deductions, while others will have CIS deductions. Software that connects payroll to your accounting system ensures accuracy. You won’t need to enter data twice, and you can reduce the risk of missing deadlines or making errors that affect staff.
With the 2025/26 tax year, be aware of any changes to personal allowance levels (expected to stay at £12,570) and thresholds for national insurance. A built-in payroll feature should update these automatically once official figures are confirmed, giving you peace of mind that your team is paid on time and in line with HMRC’s rules.
Invoicing and payment tracking
Prompt invoicing is vital for steady cashflow. If you’re late sending out a bill, you might find yourself short when supplier invoices come in. Look for a system that lets you generate invoices quickly and track when clients have paid. Automated reminders help you chase overdue bills without getting bogged down. Many systems also allow for online payments, making it simpler for clients to pay on time.
Integrations that matter
Construction firms often use more than one digital tool. You might have a cost management solution for your site materials, a time-tracking app for staff or a cloud storage service for documents. Software that can integrate with these systems can save you hours of manual data entry.
Cloud-based solutions also tend to have better integration options, and you can check your accounts from anywhere – which is a major plus if you’re on the move, working at various sites.
Cost savings and growth
The right accounting software keeps costs under control and supports sustainable growth by reducing manual processes, automating compliance tasks and providing timely data. Errors become less frequent, VAT returns are submitted on time and staff hours can be allocated to more valuable activities – like bidding for new contracts or improving site efficiency.
If your goal is to expand, having solid financial reports to show lenders or investors is essential. Banks and other providers look for consistent record-keeping and strong cashflow when deciding whether to approve finance. A system that delivers structured balance sheets, profit-and-loss statements and clear cashflow reports puts you in a better position to secure support.
What to consider before you buy
Before you select accounting software for construction companies, check what your biggest pain points are. Are you struggling with CIS? Do you need better control over labour costs? Is VAT reconciliation a source of confusion? Focus on the features that will make a difference to your daily operations and choose a system that fits your level of expertise. Some solutions offer a simplified interface, others offer more advanced tracking and analytics.
It’s also wise to find out how customer support works. Are there phone lines, live chat or email options? Construction schedules don’t always fit into a 9-to-5 mould, so reliable support could be essential if you run into problems at unexpected hours.
Staying compliant
Tax laws change, and so do the rules around CIS, VAT and payroll. The 2025/26 tax year isn’t far off, so make sure you factor in any new legislation that might affect your business. Keep an eye on Companies House for updates on filing requirements, and if you have any questions about staying compliant, we’re here to help.
At James Scott & Co, we aim to support construction businesses with the tools and knowledge they need to stay on top of their responsibilities. We have worked with a variety of firms in the sector and have seen first hand how up-to-date accounting software can reduce stress and save money.
Our support for construction accounting
We’re always ready to help you pick and set up the ideal software for your construction firm. Whether you’re a small contractor or a larger building company, we’ll walk you through each feature and ensure you’re prepared for the 2025/26 tax year and beyond.
If you want personalised guidance on choosing the best accounting software, let us know. Our specialists can integrate the program with your existing tools, organise training for your staff and help you fine-tune your reporting. That way, you can get back to doing what you do best – building projects that stand the test of time.
Ready to see how the right accounting software for construction companies can transform your day-to-day finances? Get in touch with us to learn more about our construction accounting services.
