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    How To Relieve Your Construction Company From Going Bankrupt

    Posted by Randal DeHart on Tue, Jun 04, 2019

    Are you getting resumes and applications from bookkeepers who worked for a construction company that went bankrupt and now they are so desperate for a job, so they offer to work for minimum wage or less? What they are not saying in some cases is "And everything I can embezzle, steal and sell online."

    There could be a pattern, and it is may be evident that you could be missing it. 

    Crisis Just Ahead sign with a bad day

    No construction company goes bankrupt that had useful, accurate Financial Statements and Job Costing Reports that they understood and paid attention to because they would have seen bankruptcy coming well enough ahead of time to avoid it.

    If your bookkeeper is an employee and they have no equity interest in your company they do not have the same concern about your construction company's cash flow and bottom line profit that you do because when it fails they can blame you for "Not knowing how to run a business" and go wreak havoc elsewhere.

    In some extreme cases, we have encountered bookkeepers working in construction companies who learned the basics of accounting twenty or thirty years ago and never updated their bookkeeping skills let alone enroll in any continuing education courses to learn construction accounting which is so much different than regular accounting.

    This is a recipe for disaster since General Journal Entries will NOT APPEAR ON JOB COSTING REPORTS! The typical answer the bad bookkeeper gives is, "QuickBooks is at fault!" The truth is most of them do not have twenty years bookkeeping services experience they have six months bookkeeping services experience forty times over. This means they cannot find their way out of a paper bag with a sign printed on it!

    It may seem that I have a dim view of most internal bookkeepers and that is because of the pain, havoc, destruction, divorce, bankruptcy, despair and in some extreme cases suicide they have caused company owners and their families.

    Every failed contractor learns the value of proper bookkeeping at the auction where their business is being sold off to their competition.

    Having interviewed, worked with hundreds of bookkeepers and listened while the ranted and raved about the boss I have found the most common complaint is they actually believe they are doing the bulk of the work and should be getting the bulk of the cash flow and profits even if it means the contractor has to sell their home and move their family into the street.

    In conclusion:

    The less the contractor and the bookkeeper understand about the differences between construction accounting and regular accounting the worse the relationships is and the bigger the strain. This is because the contractor needs more than just financial reports like Profit & Loss and Balance Sheet Reports they need Job reports like Job Costing and Job Profitability Reports and estimates vs. actuals including Overhead Allocation to know precisely where the money is being made and lost, and those reports require someone with Construction Accounting Skills.


    About The Author:

    QuickBooks-Trainer-Randal-DeHart-PMP-QPA-Fast-Easy-AccountingRandal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, and QuickBooks For Contractors Expert. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and Construction Accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

    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. Check out our Contractor Success Map Podcast on iTunes. 

     

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