More than any other industries do, construction companies need to keep a close eye on its daily happenings particularly its job costing. Apart from marketing, procurement and other important activities that are relevant to all businesses, the success of a construction company hinges on two main things—its quality of work, and its ability to manage job costs. While bookkeepers can do nothing to enhance the quality of work the construction workers perform, they have the ability to set systems in place to keep a close tab on job costs.
APO Bookkeeping is equipped with bookkeepers that are knowledgeable and experienced in the construction industry, as well as the structuring of the chart of accounts, and the necessary reporting construction demands. We work together to provide reliable service, and have maintained impeccable work ethics for over 17 years. We understand that in order for your construction company to perform at its best, the following must be done:
- Invoicing for every expense on each job.
- Keeping careful track of change orders.
- Entering all estimates in the company’s record-keeping software
- Staying on top of your workers’ compensation costs.
- Receivables and payables monitoring and reconciliation
- Using class tracking to categorize your Labor, Materials, Equipment Rental, Supplies, Subcontractors and all major aspect of your business transacting.
In order to get more accurate job costing information, all your expenses must be assigned to a Customer/Job. It is super important to calculate accurate pricing for construction projects, and equally essential to allocate all job related expenses to their relevant jobs and customers. Not only will you have more accurate reporting but you will be able to draw from the results – profit or loss, and decide whether to continue using the pricing chart you have in place or make changes to it.
To get paid promptly and maintain a good relationship with your customers, you must clearly document all of your existing change orders. The best way to do this, is to create a new job as a sub-job of the parent to track your costs which will help you determine the charge for the additional service(s). All notices of project changes, including scope of work, costs, and schedule changes should be recorded and monitored.
Comparing estimated costs to actual costs is one of the most important benefits of job costing, and the main reason all estimates should be entered. Entering estimates also allows for progress invoicing in many software such as QuickBooks Premier Contractor Edition, which makes invoices a breeze since you will not be entering the items twice. By doing so, you will have estimated cost and revenue amounts to compare your actual costs and revenues on job costing reports.
Just as it is important to stay in compliance with your workers’ compensation, it is vitally essential to avoid overpaying. Worker’s compensation companies offer yearly audits and will usually compensate you if you have overpaid, but unnecessary overpayment can sometimes put a dent into your cash flow. Making accurate calculations can help your business’s cash flow and allow for a more smooth running of your business.
Customers at times do not adhere to set “terms of payment” and will not make payment on time. If there is no monitoring of the accounts receivables, these accounts could get out of hand and become harder to collect over long periods of time. The sooner you follow with a non-paying customer, the better it will be for your relationship with them as well as the possibility of receiving the overdue monies. Outstanding monies do add up, and if leave to accumulate, your cash flow could be affected as well as your business bottom line.
This is of utmost importance as it is the best way to utilize your software in order to enable relevant reports to be generated for your business decision purpose, as well as to present to your CPA for tax filing.
In addition to relevant tasks that affects all businesses, the above tasks are key parts of what needs to get done in order to have a successful construction company. Small business owners who keep accurate financial records are better equipped to make well-informed decisions. Construction contractors in particular must keep track of how much clients owe them and how much money they owe to suppliers and for other expenses. Good bookkeeping requires transactions to be entered as soon as they occur, in order to ensure they are all accurately accounted for.
At APO Bookkeeping, we are equipped with the knowledge and technical know-how of the construction industry and work to design and implement solutions that will help you maximize your business strengths and minimize its weaknesses.
Consult with us so we can discuss the services you need, and how best we can provide them.