Marginal Revenue Vs. Marginal Cost In Construction Every day Your Get Bombarded with ways to spend your hard earned money. Instead of saying no all the time here is a key strategy you can use to separate the good from the bad.
Organize them into three simple piles:
Simple one-time investments
Large purchases with a down payment and subsequent monthly payments
Initial purchases followed by monthly or yearly maintenance payments
Apply three investment formulas
Present value calculations
Internal Rate Of Return (IIR)
Discounted cash flows
Opportunity costs
Here is how we do it for our clients
They provide three bits of information and we generate the report for them
The cost (exact or rough estimate / whatever they have)
How long they expect the tool / equipment will last (weeks / months /years)
How much time they estimate it will save (minutes / hours / days)
From three bits of information and some custom reports we put into their QuickBooks For Contractors file we generate a one page summary report with support sub-documents as needed for them to make intelligent informed decisions.
Shown Below - Is a very simple formula to give you some insights on investing in a one-time office equipment upgrade. The principle applies just as easily with field tools and equipment using Office Labor Cost Calculations.
One-Time Investment: Step 01 Initial Investment - Projected cost of the opportunity
Step 02 Alternate Use of Funds - Projected loss of interest or cost of borrowing initial investment
Step 03 Marginal Cost - Projected total Initial Investment plus Alternate Use Of Funds
Step 04 Marginal Revenue - Projected NEW revenue or savings from the opportunity
Step 05 ROI - Projected Return On Investment as a percentage
Step 06 Payback - Projected number of years for the opportunity to payback the Marginal Cost
Step 07 Annual Dividend - Projected NEW revenue or savings each year
Step 08 Life Span - Projected number of years the company will generate dividends
Step 09 Lifetime Value - Projected lifetime Value = (Annual Dividend X Life Span)
Step 10 Lifetime ROI - Projected lifetime Return On Investment as a percentage
Step 11 Construction Company - Annual profit as a percentage
Step 12 New Sales - Needed to generate same profit
Construction Bookkeeping Example: The Problem
Bookkeeper has one 19" RGB monitor on the desk
Hard to see numbers which causes eye strain
Bookkeeper is wasting 30 minutes a day due to poor equipment
The Solution
Invest In Dual 27" DVI monitors for your bookkeeper's computer at a rough cost of $600.00
Bookkeeper has two 27" DVI monitors on the desk
Numbers has no eye strain
Bookkeeper is not wasting time
Increase Sales Or Reduce Costs - The two main drivers of profit. Best practices from successful construction companies are to do both. The key is a thorough analysis on a case-by-case basis for each opportunity.
The Example Shown Above - Should take about fifteen minutes if your QuickBooks setup is correct for construction and properly maintained so that it generates accurate useful reports.
If Your QuickBooks - Is not generating accurate reports contact us immediately because most business failures can be traced back to a lack of Key Performance Reports and bad bookkeeping . Download the free contractor bookkeeping checklist to find out for yourself if everything is on track.
If You Are A Contractor You Deserve To Be Wealthy Because You Bring Value To Other People's Lives! This Is One More Example of how Fast Easy Accounting is helping construction company owners just like you put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to people like you and me so stop missing out! Call Sharie 206-361-3950 or sharie@fasteasyaccounting.com
Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time and now you know about it too!
You went into business for yourself for a variety of reasons and in most cases you thought all you had to do was get good jobs, do the work and you would make a lot of money. In a very short while you got a rude wake-up-call and your reality check bounced. You found out getting the jobs and doing the work was only a small part of being a contractor. What started out as an adventure turned into something not as fun as you thought it would be and then it degenerated into a nightmare as you discovered the three accounting nightmares all contractors face. #1 Calculating And Processing Payroll #2 Calculating And Filing A Slew Of Tax Returns #3 Figuring Out Which Customers And Jobs Are Profitable And Which Ones To Avoid Like The Plague
We Scan Your Receipts And Invoices link the appropriate transactions to QuickBooks or Xero Accounting Online depending on the construction accounting service you are using and provide ongoing Cloud Based Contractors Bookkeeping Services
Thinking About Outsourcing Your Contractors Bookkeeping Services? Click On The Button Below To Download A Free Guide
Need Help Now? Call Sharie 206-361-3950
We Are Construction Accounting Experts Specializing In Construction Bookkeeping Services For Contractors All Across The USA Including Alaska And Hawaii
Cloud Based QuickBooks Outsourced Bookkeeping Services For Contractors All Across The U.S.A. We are headquartered in Lynnwood, Washington State, USA. We work remotely to meet your accounting and bookkeeping needs with QuickBooks and Xero Accounting Online whichever is most appropriate for your situation.  We can perform a QuickBooks Setup,QuickBooks cleanup, customize your invoices, process payroll and generate QuickBooks financial reports.   We Help “A Little or A Lot” depending on your needs including on-going bookkeeping services. Remote web based QuickBooks for contractors bookkeeping, accounting & quarterly tax reports. We specialize in contractors including general, specialty and trade contractors, home builders and commercial tenant improvement contractors. If you need help please call Sharie 206-361-3950 or sharie@FastEasyAccounting.com If you are considering hiring a contractors bookkeeping service go to http://www.fasteasyaccounting.com/contractors-bookkeeping-services-guide-for-quickbooks
Cloud Based QuickBooks Outsourced Bookkeeping Services For Contractors All Across The U.S.A. We are headquartered in Lynnwood, Washington State, USA. We work remotely to meet your accounting and bookkeeping needs with QuickBooks and Xero Accounting Online whichever is most appropriate for your situation.  We can perform a QuickBooks Setup,QuickBooks cleanup, customize your invoices, process payroll and generate QuickBooks financial reports.   We Help “A Little or A Lot” depending on your needs including on-going bookkeeping services. Remote web based QuickBooks for contractors bookkeeping, accounting & quarterly tax reports. We specialize in contractors including general, specialty and trade contractors, home builders and commercial tenant improvement contractors. If you need help please call Sharie <span class="baec5a81-e4d6-4674-97f3-e9220f0136c1" style="white-space: nowrap;">206-361-3950<a title="Call: 206-361-3950" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" href="#"><img title="Call: 206-361-3950" style="margin: 0px; border: currentColor; left: 0px; top: 0px; width: 16px; height: 16px; right: 0px; bottom: 0px; overflow: hidden; vertical-align: middle; float: none; display: inline; white-space: nowrap; position: static !important;" src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABAAAAAQCAYAAAAf8/9hAAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAIGNIUk0AAHolAACAgwAA+f8AAIDpAAB1MAAA6mAAADqYAAAXb5JfxUYAAAKLSURBVHjadJPfS5NhFMe/21xvuhXRyJAZroiSrJnbRdT7vrAf5HBaK5RABmEEwQIvkpZ/QRcWXdSFw5soKaF0F7qZeLO13mGBDpQsf5CoxVKHOt0Pctp2uvEdrzG/V+c553w/54HnPDIiQiGpPMETABoB2AAYd9MRAMMAvGmX+RcAyAoBVJ7gZQDtABworH4AHWmX+bOMZdkjCoXiUzabvcAwzPSsob5p/VTNY9GcdpnxdmYZ9wJThSCtCr1e/4XjuNPd3d1KjUZzaGbI27ysqzGQoggAsLa1A7ehArrDxfDNr0oBlQB+wmKxbJFEL968SxoamsjkHaPU9l9piUo6A0RE1DG2QCWdASrpDAzJM5kMI8XecdjVxfEl+K9dxFgsgUvvR6HyBKHyBAEATyKLeGSsENuNcqk5kUjEGm7fzcYqr0ClVODl99+YXEvl6+c1amjVe+ahiGGYaUEQKnmeh91uL43rqheixjpdmzCL11er0PcjhrTLvMfUJsyKYUSeyWQ6enp6tgCgrKxsfbP8bB8AdE1G89cOReMAgOv+Cag8QXRNRkXAsDwcDr+am5tLCYKA3t7eo2dG+1vVK/MfpRPtA+MIReMYaKj+/xm9MiICx3EmpVL5wefzFavValis1u1vvHMkdfykCQC0kSGUTo+Ajmnx1dSC7IGD+UUCEYGIwLKsyWazrSeTSSIiMpnNf7Ttz5+ec96fr7/VnE0mk+QfHMzV3WjcKH/4rEr05QGFIA6HY4llWRLPRER+v3/HYrFMFQSIkNra2tVQKJSlfcSyLO0LECFWq3XF6XRGA4HAptTsdrsXeZ6fEHtl+31nAOA4rkUulz/I5XL63dQGgHEAN8Ph8AYA/BsAt4ube4GblQIAAAAASUVORK5CYII="></a></span> or sharie@FastEasyAccounting.com If you are considering hiring a contractors bookkeeping service go to http://www.fasteasyaccounting.com/contractors-bookkeeping-services-guide-for-quickbooks
About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System Randal on Google+
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
