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Consequences Of Avoiding Your Construction Bookkeeping

Posted by Sharie DeHart on Fri, Jul 09, 2021

If you ask 100 business owners what they like least about running a business, the chances are good that bookkeeping will rank high on the list. It's an annoying and frustrating chore that takes up much time and is easy to put off until tomorrow.

Moreover, Construction Companies have unique bookkeeping needs. Some bookkeepers and bookkeeping systems may cost you more than they are worth in salary, fees, and loss profits because you cannot get QuickBooks reports and financial reports when you need them. Chances are, you are suffering from bookkeeping pain, and your bookkeeper or accountant is overwhelmed trying to figure out how to do construction accounting.

Good bookkeeping leads to informed decisions. Avoiding your bookkeeping is dangerous, however. For example, not knowing your construction company's financial situation can result in a series of missteps that could ultimately cost you your business.
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Topics: Builders Bookkeeping Services, Accountant, Bookkeeping Services, Construction Accounting, Contractor, Contractor Tips, Contractor Operating Tips

Smart Contractors Spend Money On Marketing, Accounting, And Production

Posted by Sharie DeHart on Fri, Dec 25, 2020

There is no better time to reflect and think seriously about your construction business. Excellent organization systems add considerable value to any business because they allow you to spend more time working on your business rather than on it.

Year over year and regardless of the economy, one thing never changes; 20% of the contractors earn and keep 80% of the profits because they have a Business Process Management Strategy like our Contractors Success M.A.P. that tells them how, what, when, where and why to focus their limited resources on the M.A.P. = Marketing / Accounting / Production.

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Topics: The Contractors Account, Construction Marketing, Construction Accounting, MAP vs. PAM, contractors bookkeeping and accounting, Accounting Software for Contractors, Contractor, Construction Productivity

How To Avoid Overpaying Your Construction Business Tax

Posted by Sharie DeHart on Fri, Dec 18, 2020

Contractors want to maintain control without making any changes. "Keep doing the same thing but expecting a different result." 

Throwing the receipts in a shoebox (behind or under the seat in the truck) is the favorite way to deal with paperwork. This is "Under Managing" and frustrates everyone around them who is playing "Where's Waldo?" Job costing is nonexistent; bills are usually paid late, customers are unbilled, lost, and forgotten.

On the other hand, micromanaging every detail is an over-reaction from years of doing as little bookkeeping as possible to prepare the tax return. Knowing what to do, however, will stop you from making a big mess of it.

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Topics: How To Lower Your Tax Bill, Construction Profits, Construction Accounting, Reduce Taxes, Contractor, Contractor Tips, Contractor Operating Tips

The Value Of Time And Bookkeeping For Construction Business Success

Posted by Sharie DeHart on Fri, Dec 11, 2020

Keeping track of sales, earnings, expenses, and purchases are fundamental to your construction business's overall health and sustainability. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals. But despite their proven importance, many business owners dread and avoid accounting tasks.

Smart Contractors know their time is more valuable spent meeting prospective clients, putting together bids, managing job sites, and many other things other than bookkeeping. So they find someone else to do it. 

Any bookkeeping and accounting firm that does not know how to calculate complex algorithms that take into account fluctuations in the workload and generate a monthly fee that is fair to you and them they need to go back to school and take those courses on Decision Modeling, Statistical Analysis, and Business Process Management.

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Topics: The Contractors Account, Bookkeeping Services, Construction Accounting, contractors bookkeeping and accounting, outsourced construction accounting and bookkeeping, Accounting Software for Contractors, Contractor

Answers To Frequently Ask Questions About Our Bookkeeping Services

Posted by Sharie DeHart on Fri, Dec 04, 2020

One of the biggest concerns contractors have about outsourcing their bookkeeping to a cloud-based contractor accounting service like ours, is they think it means sending jobs off-shore rather than keeping your dollars in America where they can help other Americans. In too many cases, that is precisely what occurs.
 
Many contractors would like to subcontract out their bookkeeping services, and the two main reasons they don't is - fear of losing control and cost.
 
To paraphrase an old quote and adapt it to the construction industry, "It is not the strongest, toughest, hardest working construction contractor that survives, nor the most intelligent among them. It is the construction contractors that are most adaptable to change."
 
 
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Topics: FAQs, The Contractors Account, Construction Accounting, contractors bookkeeping and accounting, Accounting Software for Contractors, Contractor

A Contractor's Guide To Dealing With Customers Who Refuse To Pay

Posted by Sharie DeHart on Fri, Nov 20, 2020

All construction contractors have experienced bad debt's financial pain, which is defined as a customer who refuses to pay no matter what you do.
 
I've been there before, and it will probably happen again in the future. Owning and operating any business, including accounting, means sometimes you provide goods and services and not get paid.
 
When you sat for an exam or a school test and knew the material forwards and backward, it was fast and easy. The exams and tests for the classes you struggled with were the opposite.
 
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Topics: Construction Accounting, Customers, Contractor Challenges, Contractor, payment issues

Telltale Signs Of Bookkeeping Embezzlement And How To Prevent It

Posted by Sharie DeHart on Fri, Oct 30, 2020

Bookkeeping embezzlement stems from a feeling of entitlement and the need to get even. Your bookkeeper or accountant will steal if they feel confident they can get away with it and if circumstances allow for it due to weak integrity and a sense of "Redistributing The Wealth, But Not The Work Or The Responsibility."
 
It is estimated that the number of bookkeepers caught embezzling from contractors is less than one percent of the total. In most cases, the ones that are caught are rarely convicted because all too often, it is the contractor who has to spend thousands of dollars on forensic accountants and attorneys to prove the theft occurred.
 
In most cases, it is near impossible to persuade the authorities to prosecute when a contractor bookkeeper embezzles because it is often viewed as a "Victimless Crime."
 
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Topics: New Contractors, Bookkeeper Embezzlement, Embezzlement, Construction Accounting, Contractor Bookkeeper Embezzlement, Construction Bookkeeper Embezzlement, Contractor Challenges, Contractor

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.

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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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