From Accounting to Bidding – Nailing It!

When you’re in the construction contracting business a lot rests on your ability to present an accurate bid.

Before you bid your next job consider how your financial records and reports can and should strengthen your bidding accuracy.

It isn’t about the luck of the draw, nor is it about hoping you get close. It is about knowing and understanding the basic numbers (i.e. how much the materials cost, how many people it will take, how many hours will be involved) as well as a slew of other numbers which must be considered.

Taking a holistic look at the numbers

Of course, numbers in and of themselves are useless; it is when you apply your understanding of the construction industry, add your knowledge of your team’s competency levels, and take into account the likelihood of Murphey’s Law plopping itself down in the middle of your job site that you begin to have a clear understanding of how to shape your bid. Still, your financial reports are your friends, you’ll do well to listen to them. Here are some of the things they can tell you:

  • The labor and labor burden rate for each of your field employees

 

  • What your equipment costs you to own annually

 

  • Your overhead percentages per job

 

  • Your cost of sales

 

  • Your gross profit

 

  • Your net profits

 

  • Your gross margin percentage

 

  • What your liabilities and debt are

Some further information your reports will divulge

  • How your fixed costs are affecting your bottom line

 

  • How well each department or division is doing

 

  • How your sales are affected seasonally

 

  • Your past history concerning number of hours needed to complete tasks or portions of projects

 

  • Which subcontractors have proven most beneficial to you on previous jobs

What’s the point?

When you use your financial records in your bid preparation you have an historical guide as well as an up to the minute guide to assist you through the process. Plus, knowing your numbers puts you well ahead of the “average” construction contractor.

Know your contract numbers. Listen to your financial reports. Top construction business owners know their contract numbers because they listen to their financial reports.

There’s an app for that

And as for bidding, of course, there’s an app for that! Well, there are quite a few apps for that. Yet, there is one which we highly recommend and use with our clients, because of its many features as well as its ease of use. “Use Knowify’s powerful budgeting tools to create detailed materials/labor/subs breakdowns for each phase of the job, then translate your budgets into a bid in no time. Fully customizable bid templates. Syncs with QuickBooks Online.”

Additional Knowify features

  • Quickly create cost estimates or bids, and use progress or AIA billing to invoice your clients

 

  • Never re-enter the same information again. Create service templates, build a catalog, and waste no time in getting your bid to the client

 

  • Accurately track POs, expenses and revenue per job

 

  • Manage multiple jobs simultaneously

 

  • Put an end to re-entering data with Knowify’s QuickBooks 2-way synching

 

  • Quickly email bids and invoices to your clients, or POs to your vendors

Do you need help making heads or tails of how your financial reports can make a difference to your construction contracting business? Want to know more about Knowify?

Schulte and Schulte can help! 480-442-4032 or Toll Free: 866-629-7735

Will QuickBooks Online work for my Construction Business?

I was originally asked to write this article for QBOChat where it was published back on March 8th. I wanted to share it here for our readership as well (with a few minor changes.)

Have you heard it won’t?

If you are a construction company owner who has been told that QuickBooks Online won’t work for your construction business, you may want to take a second look. There are still quite a few accounting professionals who tend to think of QuickBooks Online in the same way as they view the QuickBooks Desktop software package. Don’t get me wrong, QuickBooks Desktop is still a powerful piece of software and it is still being improved upon by the great folks at Intuit. However, to truly understand QuickBooks Online you must understand the idea of SaaS, cloud computing, and app integrations.

So, what is SaaS? No, it’s not the lip that you used to give your mom and for which you were sent to bed without your supper. SaaS stands for Software as a Service. QuickBooks Online is designed to be run from the cloud and one of the major benefits of this cloud computing model is the ability for QuickBooks Online to integrate fairly seamlessly with other cloud based apps. Cloud computing and SaaS programs – “apps” – are really the future of small business management.

OK, so what?

Why, you may be asking, does this matter to me in terms of my construction business. Back to our original proposition – if anyone has ever told you that QuickBooks Online just doesn’t have enough features for you to properly manage your construction business then you should know that they’re right.

Gulp. They’re right. As a Construction Accounting Specialist, I would say that the majority of construction companies (of any size) should not attempt to manage their construction business accounting solely through QuickBooks Online. Yet, the beauty of app integrations with other cloud based software is that now you can take your accounting software – QuickBooks Online – and link it directly to your project management software – for instance, Knowify – and have all the integrated project management and accounting data be magically imported into QuickBooks Online without having to do any manual data entry from one program to the other.

Just think

Think about the ramifications of that for a second. Just a few short years ago, the various aspects of running a construction company were broken up into various parts – estimating had their software tools, project managers had their software tools and accounting had their software tools. These various software systems operated independently of one another. So, estimating would work on an estimate (say they put that together in a spreadsheet program.) Then, they had to communicate that information to the project manager and to accounting – both of whom enter the same data all over again into their respective project management and accounting platforms. As the project progresses, the project manager had to communicate with accounting information about project costs, time and materials, what portion of the job is complete, and so on and so forth.

Let’s take a walk in the cloud

Now, step into the world of cloud computing, Knowify and QuickBooks Online. With these two powerful tools integrated nearly every step of a project (no matter how complicated) can now be managed in one simple tool. Accounting still has the ‘back end’ system of QuickBooks Online for maintaining non-project related items such as payroll and bank reconciliations, but everything pertaining to the projects is now flowing through the one, easy to use system of Knowify and the accountant never needs to do double data entry work to make sense of the numbers because Knowify pushes that information into QuickBooks Online without even having to click a button. Estimating enters their estimate directly into Knowify using as much or as little detail as necessary. The project manager can manage every piece of the project from scheduling to materials invoices to billing right within Knowify. All along the way, every detail that needs to post to QuickBooks is posting to QuickBooks. The accounting department (or your knowledgeable QuickBooks ProAdvisor or Construction Company Network Advisor) can see every piece of the accounting puzzle as it pushes into QuickBooks. Financials, job costing, and other reporting tools can be accessed much more quickly because there is much less time spent between when something happens out on the jobsite and when it is accounted for in the books.

Not only that, but if you need to prepare AIA type billings on a regular basis and they give you headaches trying to figure out what the exact percentage of completion will be for that month, then you will really fall in love with Knowify’s AIA billing capabilities. Not only does Knowify track your costs and progress on the job so that you can have a very accurate picture of percentage of job completion, it even has built in AIA style forms that most general contractors will accept. (Does your QuickBooks Desktop do that?)

Now you know – and,

The next time someone tells you to stay away from QuickBooks Online because it isn’t the right tool for the job, remind them that a drill with no bits is never the right tool forthe job either!