Cash flow and bad bookkeepers are the #1, and #2 reasons construction companies go out of business. 
Do NOT hire any Contractor Bookkeeping Service until you read this guide.

Effective January 1, 2022, W-2 employees employed in WA state will be subject to a 0.58% payroll tax on all compensation. You can either pay the tax for the rest of your working years or own a long-term care policy before October 31, 2021.

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    Construction Company Recovery After A Financial Setback

    Posted by Sharie DeHart on Fri, Sep 03, 2021

    You started your construction business with plans of earning a living and being successful, but an unfortunate fact of business life is that companies suffer financial hardships. Whether those hardships are pandemic-related or linked to other urgent situations, the effect is still the same. Your finances are negatively affected, and it's up to you to lead the recovery.
     
    Almost all business sectors have experienced declining profits, liquidity that is drying out, and even bankruptcy. Although the short-term outlook varies depending on your industry sector, all business leaders need to set up a strategy to guide their way towards recovery. 
     
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    Topics: The Contractors Account, Systems And Processes, Construction Company Cash Flow

    Cash Flow Advice For Construction Businesses

    Posted by Sharie DeHart on Fri, Aug 13, 2021

    Solid cash flow management is vital to ensuring your business survives, but not everyone understands what cash flow is or how to manage it. That's likely what makes it a leading cause of stress for construction business owners.
     
    Cash flow refers to the movement of money into and out of your business. It's based on the amount of money you bring in minus the amount you spend. A positive cash flow means you're bringing in more than you're spending. A negative cash flow means you aren't bringing in enough to cover your expenses. Your company can run into problems by not charging enough for goods or services, having late-paying clients chronically, growing too quickly, or simply spending too much money.
     
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    Topics: The Contractors Account, Systems And Processes, Construction Company Cash Flow

    Five Ways To Make The Most Of Your Construction Business Downtime

    Posted by Sharie DeHart on Fri, Jun 18, 2021

    Every business experiences slow periods when the market for their goods or services lessens and sales drop. Construction business owners like you might be tempted to view downtimes as unproductive or wasted, but there are ways you can make the most of your business during these seasons.

    Here are five ways to ensure this time isn't wasted:

    1. Take a good look at your business

    When things are busy, it gets easy to fall into a habit of taking care of day-to-day tasks and forgetting your overall business picture. However, slower times are an excellent opportunity to step back from the daily grind and ask yourself if your business is still moving towards its goals, what opportunities or challenges are on the horizon, and whether it's time to try something new.

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    Topics: Construction Bookkeeping And Accounting, Construction Company Cash Flow, Contractor Tips

    If My Construction Business Is Making A Profit, Where Is The Cash?

    Posted by Sharie DeHart on Fri, Apr 23, 2021

    Some construction business owners find themselves in the difficult position of running a business that appears to be profitable but still having no money in the bank. It's a critical situation to address. After all, a lack of adequate cash flow is one of the leading causes of small construction business failure. 
     
    Here are three reasons why profitable construction businesses have little money in the bank and what company owners can do to handle these tricky situations. 
     
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    Topics: Construction Bookkeeping And Accounting, Systems And Processes, Contractor Cash Flow Problems, Construction Company Cash Flow, Contractor Tips

    How To Make 2021 Your Contracting Cash Flow Year

    Posted by Sharie DeHart on Fri, Mar 12, 2021

    Nobody wants their business to fail. Although it's impossible to predict the future with 100% accuracy, a cash flow forecast is a tool that will help you prepare for different possible scenarios in the future. 

    What is Cash Flow Forecast?

    Cash flow forecasting is the process of estimating how much cash you'll have and ensuring you have a sufficient amount to meet your obligations. By focusing on the revenue you expect to generate and the expenses you need to pay, cash flow forecasting can help you better manage your working capital and plan for various positive or challenging scenarios.

    A cash flow forecast comprises three key elements: beginning cash balance, cash inflows (e.g., cash sales, receivables collections), and cash outflows (e.g., expenses for utilities, rent, loan payments, payroll).

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    Topics: The Contractors Account, Systems And Processes, Construction Company Cash Flow

    Practical Tips To Trim Your Overhead Costs

    Posted by Sharie DeHart on Fri, Feb 12, 2021

    Every small construction business owner knows how challenging it is to cut down expenses without somehow compromising internal or external quality. Regardless of your business's nature, the first step to reducing your overhead costs is to take the time to go through every single expense you have. Next, assess which ones are necessary for your business to operate smoothly, what can be trimmed down, and what can be eliminated.

    It's important not to rest on your laurels. Continually thinking of ways to reduce your overheads is essential for a healthy cash flow, so conducting regular reviews of your business expenses should be a routine task.

    Read More

    Topics: The Contractors Account, Systems And Processes, Construction Company Cash Flow

    Cash Flow Management And How To Track Income

    Posted by Sharie DeHart on Fri, Jan 22, 2021

    A wise business owner once said, "Happiness is positive cash flow." As a business owner, I'm sure you agree. Everything is better when your cash-in exceeds your cash-out.

    A cash crisis can be emotionally devastating, and it can even kill your business. If you've ever had to beg, borrow, and steal to cover tomorrow's payroll, you know what I mean.

    Having a proper cash management system allows you to:

    • Know when, where, and how your cash needs will occur.
    • Know what the best sources are for meeting your additional cash needs.
    • Be prepared to meet these needs when they occur by keeping good relationships with bankers and other creditors.

    The starting point for avoiding a cash crisis is allowing your accountant to develop a cash flow projection for you. Your construction accountant can help you develop both short-term (weekly, monthly) cash flow projections, help you manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help you develop the necessary capital strategy to meet your business needs.

    Read More

    Topics: The Contractors Account, Systems And Processes, Construction Company Cash Flow

    Unique Tips For Managing Cash Flow In Your Contracting Company

    Posted by Randal DeHart on Fri, Aug 29, 2014


    Cash flow is the lifeblood of any construction company and especially the ones with annual sales volume under $1,000,000. Some construction Company experts even say that a healthy cash flow is more important than your contracting company's ability to complete projects! While that might seem counterintuitive, consider this: if you fail to satisfy a customer and lose that customer, you can always work harder to please the next customer. If you do not have enough cash reserves to pay your suppliers, creditors, and make payroll, then your Construction Company is out of business, game over!

    Read More

    Topics: Cash Flow, Construction Company Cash Flow

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