Each contractor type has unique construction accounting needs, which means if the QuickBooks process is custom-fitted to each construction company's needs, it is a beautiful thing.
We have listened as our contractor clients have described to fellow contractors how "fast and easy QuickBooks is and what wonderful reports it generates," while the other contractor will tell in no uncertain terms what a piece of junk it is. The difference is in the QuickBooks set up. Two woodsmen will cut and stack vastly different firewood piles in a day if one uses a chainsaw as it was intended and the other uses it as a cross-cut saw. Same tool, different result!
QuickBooks users are generally not stumped by the software; they are confused by the accounting information necessary to complete the transactions. Quick access to correct information is essential to maintain the accuracy of your financial records.
There are no limits to the number of items that can be entered into QuickBooks improperly. Messy files build transaction by transaction or merely put invoice by invoice, receipt by receipt can all be entered into QuickBooks incorrectly. No pop-up will say, "This Is WRONG" – Do It Over.
Many contractors practice the keep it simple method for bookkeeping. Put all of the receipts in the drawer, out of sight and out of mind. The drawer is next to the computer with the QuickBooks for Contractors or other bookkeeping software on it.
Using the power of wishful thinking, the hope is that the transactions will "Magically Appear" into the Bookkeeping software without any additional assistance from them.
Unfortunately, with all of the technology available, it still requires the help of a "Real Person" with the skills to know where to put the transaction into the system.
Does income exceed outgo? Short answer - yes, there is still money in the bank, and ALL of the bills are paid. Problems come from not knowing what to do.
The bank only knows what has been deposited, what has cleared and the balance left in the account. Without an accounting system that tracks all of the income and expenses, how will you know? It is easy to put everything on AutoPay and forget it.
Unfortunately, your clients have higher expectations and may not be willing to pay you based on when your auto-pays will be coming out of the checking account. Throw enough money in the checkbook, and everything will be OK – right?
In the short term, all is great. It is called "Robbing Peter To Pay Paul." In other words, you are paying yesterday's bills with tomorrow's money. This works perfectly when the economy is booming and work is plentiful. You can take that job deposit and go to the nearest Truck Dealership and buy a New Truck.
Money is coming in fast like a spring thaw; no end in sight. No big deal with supplier bills or subcontractor being paid twice. There is enough money for everyone.
Unfortunately, that was not the way it works forever. Outside forces can cause the world of Construction to go from a Boom to a Bust in minutes, and recovery usually takes longer than a few days.
A sound bookkeeping system can help you stay on top of your debts, figure out where your profits and losses are coming from, prepare you for tax season, and braces your company for future potential growth, or worse, collapse and bankruptcy.
In Ten Minutes A Day, you can:
Your construction company's financial health relies on correctly recorded transactions and data.
A proper bookkeeping system can help you stay on top of your debts, figure out where your profits and losses are coming from, prepare you for tax season, and brace your company for potential growth.
Final thoughts
Most business owners struggle to make ends meet, trying to control everything and do everything. Because they believe "If you want something done right...you have to do it yourself." The best method depends on your business focus. You can focus on making money or saving money. If making money is your focus, then do what you do best and outsource the rest. Hiring someone to do a ONE-TIME-EVENT such as setting up QuickBooks makes sense because it will free up your time to focus on the 80/20 rule to set your business up to be successful.
Proper bookkeeping leads to informed decisions. Your construction company's financial health relies on correctly recorded transactions and data. Stop playing catch-up and start keeping up-to-date financial records of your construction company.
We are here to help you achieve your definition of success, whether you would like to outsource your bookkeeping to us, buy and use our templates, or learn to do it on your own. You can be right or rich - pick one! Outsource and delegate or do it all yourself.
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