Why Construction Accounting Software Focuses on Accrual (Not Cash)
It may seem like a construction job costing software should offer a simple switch between accrual basis and cash basis reporting. But in practice, that doesn’t fit how construction accounting actually works.
1. Accrual Is the Foundation for Job Costing
Accurate job costing depends on knowing when costs are incurred and revenues are earned, not just when money moves in or out of the bank. That’s why construction financial management—and revenue recognition methods like Percentage of Completion—are built on accrual.
2. CHS Handles Earned Income for You
CHS automatically calculates Earned Income and Percentage of Completion by job. It also provides tools to easily post the Percentage of Completion journal entries, removing the burden of manual adjustments and keeping profitability accurate throughout the year.
3. CHS Supports the Completed Contract Method
For builders using the Completed Contract method, CHS includes job closing tools that properly capture and report income when jobs are finished. This makes it easy to manage either of the two IRS-approved methods—Percentage of Completion or Completed Contract—depending on your business needs.
4. Cash Basis Isn’t Just a Switch
On accrual, invoices, payables, retainage, and work-in-progress entries all matter for job cost and profitability reports. On cash basis, those details disappear—undermining the whole purpose of job costing. That’s why “flipping between accrual and cash” isn’t practical inside specialized construction accounting software.
5. CPA Adjustments for Cash Basis Reporting
For tax returns, most builders simply let their CPA convert year-end results into cash basis if required. Meanwhile, CHS keeps job costing, budgets, and profitability accurate all year long under accrual—the professional standard for builders.
✅ In short: CHS equips builders with the right tools for accrual-based job costing, automatically calculates earned income, supports both Percentage of Completion and Completed Contract methods, and makes year-end CPA adjustments to cash basis quick and painless.
📊 Revenue Recognition Methods in CONSTRUCTION
Percentage of Completion (POC):
Recognizes revenue and profit as the job progresses, based on work completed.
For Builders who want ongoing visibility into job profitability and financial health.
CHS calculates Earned Income by job, tracks Percentage of Completion, and provides tools to post POC journal entries easily.
Completed Contract (CC):
Recognizes all revenue and profit only when the job is completed.
Builders who prefer to delay recognizing income until jobs are finished (IRS-approved method).
CHS includes job closing tools that handle revenue recognition at completion, keeping records clean and accurate.
🧭 Which Method Is Right for You?
Percentage of Completion (POC): Best if you want continuous insight into profitability as jobs progress, smoother cash flow management, and accurate financials for lenders or stakeholders.
Completed Contract (CC): Best if you prefer to delay recognizing income until jobs are finished—often chosen for shorter projects or when deferring taxable income makes sense.
👉 With CHS, you don’t have to choose the hard way. Both methods are fully supported—so you and your CPA can decide what works best for your business.