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    The Number One Thing You Need To Know About Your Construction Business

    Posted by Sharie DeHart on Fri, Jan 03, 2020

    When you own a small construction business, it's vital you understand how money flows into and out of it. At a basic level, you need to know where your income comes from and what your expenses are. At a deeper level, knowing how money moves through your business can help you make strategic decisions about growth, invoicing, and debt management. 
     
    The consequences of not understanding money can be drastic—poor financial management is one of the main reasons businesses fail. That's why you need to understand cash flow. 
     
    What is cash flow?

    [Starting Cash + Cash In - Cash Out] = Cash Flow

    Before you can start to understand your cash flow, you need to know what cash flow is. Cash flow refers to the movement of money into and out of your business. It's fundamentally understanding how much money is coming into your business (your income, loans, and transfers of personal funds into the company) versus how much is leaving (your expenses, taxes, and loan payments). 

     
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    Topics: Construction Cash Flow, Cash Flow, QuickBooks Do-It-Yourself construction Bookkeeping, Contractor, Contractor Tips, Contractor Operating Tips, Construction Systems And Processes

    Five Basic Construction Accounting Tasks To Complete Every Month

    Posted by Randal DeHart on Fri, May 31, 2019

    Proper construction accounting is all about the details. The answers you need to operate and grow your company are in reports. Everything starts with cash because "cash is fact, profit is an opinion." All transactions in the bank account of your construction accounting system no matter if it is QuickBooks or Xero, must be assigned to the proper accounts:

    • Income
    • Job Deposits
    • Payroll
    • Taxes
    • Cost of Goods Sold (Direct and Indirect Costs including Labor, Material, Other and Subcontractors)
    • Other costs including permits, plans, bills from suppliers, and purchases on your personal credit cards
    • Overhead

    These tasks form the solid foundation of your small business. As a small business owner, you have more important things to do than to keep your own books. We take care of your books for you, so you can get back to the job of running your business and generating profits. 

     

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    Topics: Construction Cash Flow, Increase Profits, Increase Cash Flow, Contractor Sucess, Contractor Tips, Contractor Operating Tips

    Contractor Tactics On How To Avoid Payment Problems

    Posted by Randal DeHart on Fri, May 24, 2019

    Construction companies need short-term liquid working capital such as cash, lines of credits, loans, owner financing, credit cards, supplier accounts, and other forms of money to conduct daily operations. Small construction companies with annual sales volume less than $10,000,000 and other requirements enjoy some benefits that are not always available to larger firms. Likewise, larger firms can leverage economies of scale.

    The larger your construction business grows, the more likely you could end up operating as a bank without the hundreds of ways to generate revenues from fee income and interest calculation that banks use. The most popular method designed by investors and developers and shrewd business people who understand the concept of divide and conquer is for contractors to get little or no down payment for a construction project, do all the work, including change orders and then try to collect their money.

    What often happens is that contractors hate paperwork preferring to keep everything in their head. Then when it comes the time to collect their money, they find themselves having to re-sell the job and talk their customer into parting with their money. It's been said: "The value of services rapidly diminish after the services have been performed," which is why highly profitable companies like McDonald's gets your money before they deliver your meal. Compare the success and profitability of a McDonald's franchise to most restaurants.

     

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    Topics: Construction Cash Flow, Increase Profits, Increase Cash Flow, Contractor Sucess, Contractor Tips, Contractor Operating Tips

    Construction Company Cash Flows Are Easy To Understand

    Posted by Randal DeHart on Thu, Jun 20, 2013

    Construction Cash Flow Example

    [Starting Cash + Cash In - Cash Out] = Cash Flow

    Read More

    Topics: Construction Cash Flow, Cash Flow Video

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