4Thought Blog

4thought graphic - blog 2020

9 Strategies to Boost Cash Flow in Construction

Posted by Concannon Miller on Tue, Mar 2, 2021

Contractors trying to keep their construction companies financially healthy face two intrinsic challenges: the seasonal nature of construction work and the unpredictability of an invoice-based business.

Both can disrupt cash flow and make collecting and paying bills challenging. With positive cash flow, your balance sheet is better able to handle the industry's typical ups and downs plus any curve balls thrown by outside forces — such as the COVID-19 pandemic.

Here's how to promote a freer flow of cash.

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Topics: Construction & Real Estate Development

4 Strategies to Reduce Fraud in Construction

Posted by Concannon Miller on Thu, Feb 11, 2021

From equipment theft to padded time to cyberattacks, contractors are vulnerable to a variety of fraud schemes. According to the Association of Certified Fraud Examiners, the median loss due to internal fraud is $200,000 for construction companies — significantly higher than the $125,000 for all industries.

Many factors make businesses in the sector rife for fraud — and owners may not be able to control all of them. For example, no one person can physically monitor multiple job sites, particularly if they're geographically distant.

What you can do is establish and enforce antifraud policies and procedures that make theft difficult, if not impossible. Your internal controls should address the following issues.

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Topics: Construction & Real Estate Development

Construction: 8 Accounting Practices to Boost Your Bottom Line

Posted by Concannon Miller on Tue, Jan 5, 2021

Construction accounting is different from the accounting practices of businesses that use only a general ledger. Because construction companies perform contract work and take on invoice-based jobs of varying sizes and durations, they must treat each project as a profit center.

You can help keep your business healthy in 2021 and beyond by adopting or refining a few key accounting practices. The following eight examples boast a proven track record of success when implemented at the project level:

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Topics: Construction & Real Estate Development

Setup a Construction Firm Debt Management Plan for Significant Savings

Posted by Concannon Miller on Thu, Dec 10, 2020

Creating a formal debt management plan for your construction company will save you thousands or even tens of thousands of dollars in interest, over haphazard borrowing.

Following certain best practices and using a structured approach to your company's debt plan is part of an effective construction finance, accounting and tax strategy.

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Topics: Construction & Real Estate Development

Construction: Prequalify Subcontractors to Protect Your Profitability

Posted by Concannon Miller on Wed, Nov 18, 2020

If you're a general contractor, the business acumen and financial strength — or weakness — of a subcontractor can affect your ability to deliver a quality project on time and within budget.

Delays caused by a subcontractor's failure to complete work can lead to scheduling delays, cost overruns and even the dreaded "profit fade."

It's not always easy to identify unreliable subcontractors. A prequalification program can help you determine whether what looks like an ideal partnership is, in fact, a risky proposition.

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Topics: Construction & Real Estate Development

Are Your Construction Contracts COVID-Proof? What to Include

Posted by Concannon Miller on Thu, Oct 15, 2020

It's the fourth quarter of 2020, and the COVID-19 pandemic continues to affect the construction industry. Project delays, work stoppages, supply chain disruption and lost productivity remain a reality for many contractors.

All of this makes planning difficult, particularly when drafting project contracts. To protect your business from liability in these uncertain times, be sure to include the following clauses in project contracts.

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Topics: Construction & Real Estate Development

Time to Upgrade Your Construction Accounting Software? What to Consider

Posted by Concannon Miller on Thu, Sep 17, 2020

As construction companies evolve, they quickly outgrow their first generation accounting software packages.

That software was likely purchased when there was not a lot of capital on hand and not a lot of business to keep track of. If your firm needs to upgrade, making the decision can be daunting.

Here are some considerations that can help you determine if you really need to change or if your current software still has some life left in it.

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Topics: Construction & Real Estate Development

Construction: How Joint Ventures Can Boost Business, Finances

Posted by Concannon Miller on Thu, Aug 13, 2020

Joint ventures are common in the construction industry, especially with large long-term projects. These collaborative arrangements allow construction firms to work together, for a limited time period, on one or more construction projects.

The upsides include pooling of expertise and resources, broader geographic reach, reduced risk, and enhanced financing and bonding capacity. But joint ventures also have potential pitfalls, so they need to be set up and managed with care.

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Topics: Construction & Real Estate Development

Tax Relief for Rental Real Estate Owners with COVID-19 Crisis Losses

Posted by Concannon Miller on Tue, Jul 7, 2020

Economic fallout from the COVID-19 crisis will cause many rental real estate properties to run up tax losses in 2020 — and possibly beyond. Here's a summary of important federal income tax rules for such losses.   

What You Can Write Off

Rental property owners can deduct mortgage interest and real estate taxes. They can also write off all standard operating expenses that go along with owning rental property. Examples include:

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Topics: Construction & Real Estate Development, COVID-19

Overcoming COVID-19 Challenges: Tips for Construction

Posted by Concannon Miller on Thu, Jun 11, 2020

Although the novel coronavirus (COVID-19) pandemic has walloped most U.S. businesses, how your business recovers will largely be construction-industry-specific.

For example, most construction companies need to address disruptions to project schedules and overseas supply chains. They may need to renegotiate building contracts and find replacements for workers who are no longer available due to travel restrictions.

Depending on your niche, the fallout from COVID-19 could last months and possibly even years. Here are some tips on handling five major obstacles to help make a full recovery:

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Topics: Construction & Real Estate Development, COVID-19

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