Modern Home Builder 2018 - Volume 6, Issue 2 - 15
as income, this client should have put it on the balance sheet
as a liability.
Considering that most construction firms juggle 10 to 15
projects in a given year, it is no surprise that things get jumbled
up when it comes to bookkeeping. This is particularly true of
firms that fail to properly track expenses according to project.
Firms must ensure they have enough money to cover materials
and labor until each project is complete, and it would be easy
to unintentionally blow beyond a budget without detailed and
updated financial information.
One client was completely unable to track the profitability of particular projects until we went in and cleaned up its
historic expenses to include relevant details. It was a massive
undertaking, but the end result gave our client tremendous
insight into its past work. Armed with this information, this
client was able to target certain project categories that tended
to be more lucrative than others.
Yet another firm kept its finances in order but failed to
charge its clients sales tax. Whoops. The firm was selling its
services - which are not subject to sales tax - alongside taxable materials, which led to the confusion. This mistake ultimately meant the company had to absorb the sales tax for a pile
of closed projects, leading to lost margins.
4. Hire an experienced accountant - You might currently
use an office manager to handle your financials, but you are
probably missing out on the latest technologies as a result.
When it is time to implement cutting-edge efficiency tools,
bring in an expert. A bookkeeper or accountant who has
industry experience can set you up for success early on. Instead of wasting budget on a full-time hire, you might consider outsourcing certain tasks using freelancers.
In a perfect world, you would want to have accounting, payroll
and project management systems in place long before you ever
break ground. Without a proper foundation, you will likely hit
financial snags that could topple your growing business. Thankfully, it is never too late to install the proper systems to mitigate financial faults. )
Michael Burdick is the CEO of Paro, the outsourced finance and
accounting department for growing businesses. Paro's purpose
is to empower people to do what they love.
Rather than incur the costs of bad bookkeeping, take charge of
your finances to ensure your company will still be around for
future jobs. Here's how:
1. Invest in accounting software - Technology is important
for every aspect of your company's finances, so it makes a
lot of sense to get high-quality accounting software. Look
for an accounting platform that allows you to track costs
by project, which is a standard feature with QuickBooks
Desktop Enterprise, but is also possible by using APIs such
as TSheets or Scoro with QuickBooks Online.
2. Move to the cloud - Paper processes and physical time
cards slow everything down. Technology allows you to easily
sync your data with various digital accounting platforms.Team
members can track delivery and receiving tickets by taking
photos in the field and uploading them to apps such as Expensify or Bill.com.Your finance department can then effortlessly
compare this information to original invoices.
3. Track costs with detail - If you are not already monitoring
revenue by client or project, you are missing out on a tremendous amount of insight. Larger projects might warrant
a project-specific credit card or store account for all related
transactions, but you will want to establish other methods of
grouping costs for smaller jobs.You can do this by adding another level of detail to the transactions in the "Class Tracking"
section of QuickBooks. You can assign each project its own
class code to help you track transactions with added detail.
Volume 6, Issue 2 www.mhb-magazine.com