As you're no doubt aware, bookkeeping for builders is challenging. Construction companies tend to have unstable workforces, wage rates that can change by location, and multiple ongoing projects with various costs and durations.
Here are some bookkeeping tips that can help you stay organized and set up your business for success in the coming year.
They say hindsight is 20/20. You can take advantage of that hindsight by holding regular project closeout meetings to find nuggets of truth about how the project went and learn from them.
Not every project makes money for your construction firm. You can find ways to improve project and accounting management if you set a tone of openness to genuine feedback that will filter down to your project managers and other key employees.
Here are some guidelines for success in this endeavor:
As you probably know, construction businesses are frequently scrutinized for their creditworthiness and financial stability by sureties, banks, insurers and other parties. Your ability to build and protect your financial reputation is critical to winning work and managing risk.
Building creditworthiness is a daily and monthly process. But the payoff is worth the effort: easier access to equipment financing and surety bonds, and the ability to negotiate favorable loan terms and conditions.
What's more, contractors with good business credit ratings are likely to win more contracts because they're usually seen as more reliable by project owners and potential partners.
No matter the size of your construction business, cost codes are essential for tracking where and how you incur project costs. Although a job's overall cost will tell you what was spent and how much was made, it won't tell you why you spent the money or earned that profit.
Cost codes provide an easy and effective way to organize costs by separating them into specific categories. They also show how much specific activities are costing — including which activities are costing too much.
When you know where money is being spent on each job, you can use that information to create more accurate estimates and bid more effectively on projects. Ultimately, this could help to increase profits and spur business growth.
President Biden’s infrastructure plan is set to improve failing infrastructure, rebuild the economy and create new jobs.
As of this writing, the plan, which Biden originally released on March 31 as a $2 trillion capital injection over 10 years, is a $579 billion proposal that has bipartisan agreement, though Democrats have signaled the bill may only move through Congress in tandem with a larger spending and tax increase package, which they may try to pass via the reconciliation process.
Regardless of what the infrastructure plan may ultimately look like, construction companies should consider what an increase in project demand could mean for their businesses. Already, some construction companies whose balance sheets might be too small or who don’t want to take on all the risk, are striking joint ventures or partnerships to bid on large projects that are anticipated to result from the infrastructure bill.
Processing payroll is a critical administrative task that directly ties to your construction company's labor costs, profits and ability to comply with labor laws. Yet staying on top of payroll can be daunting.
Depending on the job, your payroll staff may have to account for union requirements, prevailing wage rates and certified payroll — not to mention various tax rates and rules of multiple jurisdictions. Because of such complexities, mistakes are common.
Making payroll processes more accurate and efficient isn't easy, but there are ways to help simplify these tasks. Here are some suggestion for preventing common yet costly mistakes.
The primary focus of most contractors is to complete projects according to specifications, on time and on budget. For some construction businesses, accounting tasks that support jobs can take a backseat.
Unfortunately, without accurate and efficient accounting practices, you may be signing contracts that hurt, rather than boost, your bottom line. Here are five issues commonly confronted by contractors and how you can prevent them from hurting your bottom line.
One of the greatest challenges of running a construction company is getting paid in a timely manner. Waiting on unpaid invoices can put a serious dent in your cash flow — not to mention increase stress in an already stressful job.
But it's possible to put processes in place or fine-tune your existing ones to facilitate prompt remittance. Consider the following six tips:
Have you ever completed a job only to realize that the cost of performing the work equals or exceeds the revenue that the project brought in? This phenomenon is called "profit fade" and, if it occurs repeatedly, it can prove fatal to your business.
Although profit fade could threaten any construction business, it's a particular concern for contractors who undertake long, complex projects. Calculating costs and predicting revenue for these jobs can be difficult because materials costs can rise during the project and unforeseen conditions — such as bad weather — can affect project schedules.
Construction payroll can be complex, but with the right system in place it doesn't have to be stressful.
Up-to-date payroll software generally saves money by preventing costly math mistakes and helping you manage payroll taxes. It also can save time by automating reports and, in many cases, integrating with other systems.
Here are some best practices to follow when choosing or upgrading your payroll software.
