Has this happened to you or someone you know? If so call Sharie at 206-361-3950 and let's talk!
I understand exactly what the issue is and will share it with you. Most bookkeepers have no system. Bless their little hearts! They have good intentions but they never have and never will do the mental heavy lifting to develop a contractors bookkeeping system.
Anyone with a little bit of experience can get a business license and open a bookkeeping services firm. Most bookkeeping services are one person operators working from home with less than a dozen customers and the usual breakdown is as follows:
2-5 retail type business customers
3-5 service type business customers
1-2 contractors
They labor under the illusion that all bookkeeping is basically the same. That is similar to saying all dogs are animals so all animals must be dogs. In reality bookkeeping is a bit like being a doctor; they work on two makes and one model and yet they require enormous amounts of skill and training.
#1 Internal Bookkeeping which is the day-to-day data entry, reconciling bank accounts, credit card accounts, payroll processing and the other tasks with one primary purpose. Generate useful financial reports for the business owner to read, understand and make informed decisions to operate and grow their company.
#2 External Bookkeeping which is responsible for calculating how much tax to pay and preparing financial statements for loans, lines of credit and performance bonds.
#1 Retail which is roughly 80% of all bookkeeping and accounting and is primarily what is taught in colleges and universities. All retail businesses, most service businesses and practically all professions need this type of accounting and it is the simplest form of accounting. It takes roughly 2,000 hours of training to be proficient enough to get by and do a reasonable job.
#2 Construction which is roughly 15% of all bookkeeping and accounting and includes serving the needs of general contractors, builders, residential and commercial remodelers, specialty trade contractors and about fifty more contractor types. This level of accounting takes roughly 10,000 more hours of training on top of retail accounting to be proficient enough to get by and do a reasonable job. For more information about the difference between regular accounting and construction accounting click here
#3 Manufacturing which is roughly 5% of all bookkeeping and accounting and includes a heavy emphasis and specialized skill in managing inventory is used in small and very large companies that buy raw materials and turn them into finished goods. This level of accounting also takes roughly 10,000 more hours of training on top of retail accounting to be proficient enough to get by and do a reasonable job.
You can begin to see the problems most bookkeeping services have. To begin with they have no system. Every client is treated differently. If they have (6) clients then they most likely have:
(6) Different Chart of Accounts
(6) Different Item Lists
(6) Different ways of entering transactions
(6) Different ways of setting up customers, employees and vendors
(6) Different ways of doing everything
That one bookkeeper needs to be paid a lot of money to keep them on board which means every bookkeeping customer is forced to pay more than they should.
The answer in most cases is for the one lone bookkeeper to try and keep everything in their head and slowly go insane. If they hire someone they find they need to spend hours and hours training them and even then things get screwed up.
There are few bookkeeping firms that think they have the answer. Simply assign each bookkeeper a few dedicated clients to work with on a regular basis.
Both of these approaches are known in systems engineering as the diving board. One resource or person supporting and entire set of tasks. Everything works well until that one lone bookkeeper gets sick, goes on vacation, retires, quits or gets fired.
In contrast look what happens when there is a contractors bookkeeping services system in place and there is:
(1) Chart of Accounts
(1) Item Lists
(1) Way of entering transactions
(1) Way of setting up customers, employees and vendors
(1) Way of doing everything
The system is stable, the load is shared and if any one bookkeeper is no longer available the remaining team can carry the load for a short while until a replacement is found.
Every bookkeeper is paid better than their counterpart in the previous example because the systems and innovations in place allow for them to serve a minimum of two times as many contractors which means every bookkeeping customer pays much less.
We love working with brand new and seasoned, small contractors in residential, commercial, remodel, and home building who need bookkeeping, invoicing (Flat-Rate, Not-To-Exceed, Time and Material, Cost Plus), sales tax, payroll, payroll reports, job deposits, WIP, Work-in-Progress, retention, pay applications, insurance audits or business processes.
Having been in Construction Bookkeeping and Accounting for a very long time we know what to do!
Profitable Construction - Companies have known about the value of outsourced bookkeeping services for a long time and now you know about it too!
We Scan Your Receipts And Invoices link them to your QuickBooks or Xero transactions where it is appropriate and give you back a CPA-ready packet for your tax return and we provide ongoing Cloud Based Contractors Bookkeeping Services by accountants who understand construction.
About The Author:
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Follow Randal on Google+