We just returned from the 2019 Sage Timberline User Group (TUG) conference, where industry experts pulled back the curtain on emerging trends in the construction industry. Insider CPAs, construction company controllers and payroll/HR administrators, industry consultants and Sage partners shared insights that forecast the coming landscape for construction.
IDI president, Kit Dickinson, spoke in a presentation with one of our payroll partners to address the payroll challenges of construction companies. Here are three big payroll themes that stood out at the Sage TUG Conference.
Growing Companies Have Growing Payroll Problems
Whether you're taking on more jobs in new states, or you're acquiring other construction firms, your company's growth adds more complexity to the back office. Payroll, HR and accounting need to quickly learn about managing projects in those new states and ensure you're covered.
Your growth also increases the burden of managing compliance issues with the new employees, who are often in different states—especially if you're taking on unionized employees.
We spoke with a Sage user who works at a company that's increasing from 400 to 1100 employees through a large acquisition. The president told the payroll administrator to figure out how to handle the influx of 700 new employees, with the same number of back office staff on her team. The acquired company works with unions and certified jobs that are all new to her. It's on her to make it all work and balance everything that's going on—all while ensuring the company doesn't commit wage theft or other violations.
You CAN Outsource Payroll
During the TUG conference, Sage announced that the hosted, web-based version of Sage 300 will leverage the Sage Intacct platform (construction edition). The Intacct platform will be built out to meet the needs of construction, but it will not have an internal payroll module.
Many users we spoke with didn't realize there was a way to outsource payroll while keeping Sage 300 for job costing and financials. Others have unsuccessfully tried outsourcing payroll in the past, but they got burned when payroll sales reps treated the construction industry like any other business. The payroll solution couldn't handle complex construction pay and benefit policies OR transfer job cost details back to Sage300, and it created more problems than it solved.
Construction is a complex industry, and not many people understand all of a contractor's needs and speak the language. IDI has been a trusted industry advisor for over three decades, and we can anticipate potential hangups before they happen. Our Contractor Central software fills the gap between outsourced payroll and Sage 300.
As a Sage 300CRE Development Partner, IDI can integrate an outsourced payroll with your ERP to boost your efficiency around payroll and job costing/financials. Contractor Central can:
- Integrate outsourced payroll with your Sage300 ERP with both GL and Job Cost details
- Accommodate the complexities of government and union contracts
- Handle certified payroll reporting requirements
- Eliminate the need to enter new project information two to three times in different systems
IDI has been there and we've earned a reputation among contractors as a trusted guide. We get it, and we partner with payroll companies to help them get it too.
Related content: The HCM System Buying Guide for Contractor Companies
Performance Under Pressure
The federal government is increasing scrutiny on construction companies for wage and hour violations. With expanded government penalties, payroll/HR/accounting teams are forced to find ways to offload compliance risk. The environment is continually changing, and legislation is pending where wage violations can put company owners personally at risk along with treble damages.
As we noted in our presentation at the Sage TUG conference, construction companies are in a tight spot: they're eager to outsource payroll to a trusted provider, but these legal risks (and getting burned in the past) make them twice shy.
If any sales rep tells you that the outsourcing process is simple and easy, beware. It can be done effectively—especially if your payroll provider uses Contractor Central to cover their gaps—but it's never a quick out-of-the-box process. Make sure your payroll provider spends plenty of time listening to you. They should also consult all of their partners to estimate an accurate time frame for installation, setup and testing.
A Sage TUG Success Story
Vermont Mechanical, a long-time client of Sage, had historically run payroll in-house with the Sage 300CRE payroll module.
Their accountant, Kelley, met IDI at the 2018 Sage TUG Conference. She was cautiously optimistic to find out we could outsource payroll with a payroll provider to offload compliance risks, while keeping their job costing and financials in Sage 300CRE.
Vermont Mechanical signed up and implemented IDI's Contractor Central to help with managing the different prevailing wages and labor burdens to each job/project necessary for paying their employees correctly into their outsourced payroll. After payroll runs, Contractor Central transfers job costing and GL entries to be sent to Sage for their reporting and financials.
Ready to get payroll under control?