Note: We are tracking the latest construction industry news and online resources for contractors in the time of COVID-19.
Please note that the PPP loans are closed; and other SBA loans are hard to get.

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    Proactive Contractors Use Lien Services To Protect Cash Flow

    Posted by Sharie DeHart on Fri, Oct 16, 2020

    Proactive versus reactive are the two methods of getting something done. I find everyone works in a combination of both, I included.

    Proactive is scheduling and doing everything ahead of time. Nothing is ever waiting until the last minute. Reactive is more emergency driven and are things that need to be done now.

    As much as we plan, it would be best if you were flexible, adaptable, and reliant. Things happen that are beyond your immediate control. Those of you who want a predictable environment are employees working for a large employer where schedules are fixed, and they are doing the same things every day.

    Read More

    Topics: Construction Accounting, Service Agreements For Your Contracting Company, Service Agreements, Contractor Challenges, Lien Waivers, Contractor

    What Does Your Accounting System Say About Your Construction Business?

    Posted by Sharie DeHart on Fri, Oct 09, 2020

    How many times a day do you hear from someone saying, “It’s Boring", or "I’m Bored.” It is a red flag that should light up your “Oh Crap” meter. Moreover, more important, whenever an employee says it. Because this usually means they are shortcutting the work versus the fact that you have so many right processes in place that the work is genuinely dull. Being bored is a factor in manufacturing jobs.

    I saw a special where a manufacturer described how the process is that they moved employees on a scheduled basis between workstations to help them avoid boredom and stay fresh throughout their workday. Proved to be a Win-Win for everyone. Studies found that alert employees have fewer accidents, which in turn reduces your cost of doing business and raises cash flow and profits.

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    Topics: The Contractors Account, Construction Accounting, contractors bookkeeping and accounting, Accounting Software for Contractors, Contractor

    Costly Bookkeeping Mistakes That Kill Profit And Growth

    Posted by Sharie DeHart on Fri, Sep 25, 2020

    Most construction business owners like you understand that effective financial management is key to your success. But lack of knowledge, frustration, and even avoidance can add up to your bookkeeping mistakes that derail future company growth.

    With everything contractors like you need to do every day, including weekends and holidays, it's too easy to let crisp, timely Financial Reports go unread, and in some cases, you may not fully understand what they are telling you when you do read them.
     

     

    Protect your construction business and reduce stress by avoiding these costly bookkeeping errors:

    Mixing personal and professional finances

    From day one, business owners should have a separate bank account to deposit their income and pay their business expenses.

    It's also crucial to designate a business-only credit card. Come tax time; separate statements will make submitting claimable expenses quick and easy while reducing painful audit risk.

    Letting accounts receivable slide

    It's frighteningly easy to lose track of which customers have paid you and which clients are late. Implement a strict policy and schedule for tracking accounts receivable and pursuing unpaid invoices. 

    • Ask customers to pay at the point of purchase or no more than 30 days later;
    • Contact clients to confirm they have received your invoice and to agree on a payment date;
    • Follow up immediately when payment dates are missed; and
    • Keep accurate, up-to-date records of each client's payment history.

    Investing in a cloud-based accounting solution can make AR a breeze by automating your monthly invoicing – and contacting late payers with a reminder email. 

    Not tracking direct construction job for each job or project

    If you want to know where you are making and losing money, you need to implement a system of Job Costing. 

    Not allocating overhead to jobs

    For your Job Costing and Job Profitability Reports to be useful, you need a way to allocate overhead among jobs. Overhead generally refers to costs that benefit all jobs.

    For Example:

    • Office And Shop Rent
    • Office Supplies
    • Admin Staff Salary
    • Officer Owner Salary
    • Marketing And Advertising
    • Consulting, Legal, And Accounting
    • Other Overhead Costs

    Not using tech to track your expenses

    Tired of chasing down missing receipts and struggling to justify claims come tax time? There's an app for that! Our outsourced bookkeeping clients have mobile apps specific to their company needs that integrate seamlessly with QuickBooks or Xero.

    Neglecting to strategize for long-term growth

    Practical accounting means managing day-to-day finances while making provisions for future growth. Software and cloud-based solutions offer easy ways to track your financials, but they also generate reports and provide analytic tools construction business owners can use for future forecasting.

    Familiarize yourself with the reports your software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about which reports and metrics are most important for your particular business and how to utilize them. 

    Final thoughts

    You don't have to go through it alone. 

    Construction business owners like you are rarely trained accountants. Don't try to manage your company's finances all by yourself. 

    Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends. 

    You'll feel empowered, which is step one to forging a more love-filled relationship with small business accounting. If you need help avoiding these mistakes, fill out the form on the right and I'll be in touch with you.

    About The Author:

    Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

     

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    Topics: Construction Profits, Construction Accounting, Contractor, Contractor Tips, Contractor Operating Tips

    Contractor Clients' Four Critical Words That Leads To Change Orders

    Posted by Sharie DeHart on Fri, Sep 18, 2020

    Are you sick and tired of customers continually changing stuff on you and creating delays or extra work?

    Is your customer leaving you "love notes" regarding minor changes they would like to make on the counter or someplace you can easily find them when you first arrive in the morning? Or the never-ending chain of emails. Or greeting you with "I/we thought we would like to have...."

    Do these notes, emails, or greetings send you into a mental or alone verbal rant about why they can't leave you alone to get your work done?

    Are you concerned they expect you to do the additional work for FREE, NO CHARGE, NA-DA, ZIP, ZERO?

    You needed to be compensated for your time and your crew's time, and you need to do it right away.

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    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Change Order, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    8 Common Challenges New Construction Business Owners Face

    Posted by Sharie DeHart on Fri, Sep 04, 2020

    Freelancers in all industries deal with the same problems due to the nature of their work. Most of you came from the skilled craftsman trades, some of you worked as a manager for a construction company.
    Read More

    Topics: New Contractors, Construction Accounting, Contractor Challenges, Contractor

    The Value Of Service Agreements In Your Construction Company

    Posted by Sharie DeHart on Fri, Aug 21, 2020

    It goes to the heart of the question of the difference between a customer and a client. Service agreement holders are more likely to be clients who add more value to your construction company because they represent your customer base's most loyal segment. 

    Read More

    Topics: Construction Accounting, Profitable Leads For Contractors, Service Agreements For Your Contracting Company, Service Agreements, Contractor

    Contractors, Know What You're Good At And Generate More Leads

    Posted by Sharie DeHart on Fri, Aug 14, 2020

    The pressures of owning and operating a construction company can be, at times, almost unbearable. Unlike any other business, there's no "one size fits all" solution in your toolbox to fix your dilemma.

    Read More

    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Customers, Contractor, Contractor Tips, Contractor Operating Tips, SWOT Analysis

    Five Ways To Increase Your Construction Business Profit

    Posted by Sharie DeHart on Fri, Aug 07, 2020

    First, we always ask our clients to decide what they want from their construction company. Do you want to get rid of the boss? Do you want to work in a more structured environment? Are you sick and tired of working for the boss's son or daughter? Do you want to make much money? Do you wish to make enough money to pay the bills and enjoy a vacation now and then? There are no wrong answers, whatever is right for you is the correct answer; however, you need a reason to do it otherwise when the going gets tough, and it will, you will either win or lose depending on your purpose. With a big enough reason, you will find a way to win.
     
    For many small construction companies, the best way to improve profitability is to increase turnover, as there's no limit to sales, but there is a limit to how much you can reduce your costs.
     
    Let's look at how you can focus on each of the five ways in our profit increase calculator to achieve your goal of improving profits.
     
    Read More

    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    Troublesome Customers Every Contractor Should Learn To Recognize And Deal With

    Posted by Sharie DeHart on Fri, Jul 24, 2020

    Customers are disloyal price buyers who purchase commodities and services with cost as their primary consideration. Clients are loyal value buyers who purchase goods and services with suitability as their primary consideration.
     
    Every businessperson knows that customers and clients are not created equal. Clients are loyal, while customers will stray if they're offered a slightly lower price elsewhere. Some customers are demanding, while clients only call when they wish to hire you right away.
     
    Every business must deal with a variety of customers and clients. But there are certain types of customers who do more harm than good to your construction business - they drain your resources while adding little to your revenue. 
     
     
    Read More

    Topics: Construction Accounting, Clients or Customers, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    Questions To Ask As Your Construction Business Reopens

    Posted by Sharie DeHart on Fri, Jul 03, 2020

    (Note: Celebrate Independence Day with a coupon code found at the end of this post)
     
    As small business owners look to operations after reopening, there are some critical business questions to ask. These questions will help you determine what adaptations you want to keep, whether your construction business model is working, if there are additional changes you want to make to keep your company operational through future economic downturns.
     
    It's not always fun to do this sort of examination, but the answers to these questions will help you make the best possible future decisions.
     
    Read More

    Topics: Construction Accounting, Contractor, Contractor Tips, Contractor Operating Tips, Reopening, Construction Business After COVID-19

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