Construction Accounting – Zooming In

Construction Accounting takes zooming in on the important areas.

One of the questions we’re often asked by commercial subcontractors is, “How do you do it?” The following is a dive into what it looks like working with an outsourced accounting and advisory firm. (Well, we don’t know if it is true for other firms – but this is what it looks like working with us. 😎)

Construction Accounting zoom in on understanding

While it is always our goal to provide each of our clients with a clear and up to date financial picture of his or her business, we remember to do so in English not Accountanteeze.

Some have shared there was a time, before they came to us, when they looked at all those reports and thought of them as a foreign language. We’ve become their “complexity filter.”

A few other things we implement in understandable language are:

  • Guidance for meeting long and short-term goals
  • Information concerning strategic thought and vision
  • Processes which make profit a verifiable reality

At its core, our services provide clients with confident, well-informed, professional advice.

Construction Accounting zoom in on client needs

Each client comes with his or her own set of needs. Things like:

  • Please clean up our old issues.
  • Can you just get us back on track?
  • We need help achieving high levels of profitability.
  • I need to know my books are taken care of and I can rest easy at the end of the year.
  • We’re trying to get bonded and we need to get this mess straightened out.
  • I hate dealing with contract management, can you take care of it?
  • My business coach said I need to build systems; can you help with that?
  • We took in a lot of money last year but can’t see where it went. Can you help?

Regardless of the complication, our goal is to meet individual needs, always striving to make it easier for each client to run with the big dogs.

Construction Accounting zoom in on systems

One of the things we strive to make clear is we are NOT simply financial historians.  While it is necessary that we give timely and accurate financial information, we also aid our clients in other areas. One of those areas is help in building systems.

We help clients:

  • Improve processes and procedures
  • Increase organizational structure
  • Better understand next steps

We help commercial subcontractors figure out which systems are working, and which are not. More importantly, we don’t try to “fix” their unbroken systems.

Zooming in through Zoom

Part of our job is helping our clients devise a tech-stack which helps them have better systems for dealing with their business and financial needs. So yeah, we do spend time with our heads in the cloud. Yet, we’re also down-to-earth when it comes to dealing with our clients.

And the corner where cloud and earth meets is when we have regular Zoom meetings with individual clients. It is during those times we meet with them “face-to-face” whether they’re in New Jersey or New Mexico, North Dakota or South Carolina, in a Phoenix suburb or Phoenix proper.

The types of things we discuss with them are:

  • Month end reports and what they mean
  • Unusual items we noticed in their reports
  • Our questions concerning their data
  • Their questions
  • Ways to improve (both from their end and ours)

While we believe our experience and well-thought-out tech solutions are important to how we help our clients, we believe nothing would be possible if we didn’t have good systems for communication in place. And one of those systems is a video conferencing SaaS called Zoom.

There you have it. We’ve zoomed in on a few things you can count on us to do to help you grow your commercial subcontracting business. And, we’ve told you how it is possible to meet with our clients no matter where they are located. Now you have a better idea of “how we do it.”

 

Want to learn more? Our office hours are 9 to 5 Arizona time where our main office is located. And our Toll-Free number is 866-629-7735. Give us a call!

Counting the Cost in Construction Accounting

Counting the cost in construction accounting.

Counting the Cost in Construction Accounting

Counting the Cost in Flood Waters

There is an interesting law here in Arizona which is known by the name, “Stupid Motorist Law.” It says something to the effect of “any motorist who becomes stranded after driving around barricades to enter a flooded stretch of roadway may be charged for the cost of their rescue.” Apparently, the law can be found in Arizona Revised Statutes section 28-910. Also, just as apparently, the law isn’t regularly enforced.

So, for those of us who don’t drive around barricades when the summer rains create raging rivers where before there were only dry creek beds (or simply dips in the road) it doesn’t mean much one way or the other. For those who do, it only means they won’t be charged by the state for their stupidity. Yet, they will still likely be “taxed” because of their poor decision.

  • Towing
  • Repair
  • Beyond repair
  • Missed time at work
  • Lost opportunities

And, don’t forget all that schplainen’ they’ll have to do with rescue workers. Not to mention spouses, parents, children, friends, insurance companies, and so on.

Counting the Cost in Words

Yet, being wise to the way of words, I would replace “stupid” with the word, “ignorant.” Here’s why – being stupid means you don’t have the brain cells to get the job done. Being ignorant means you haven’t as yet learned.

See the difference?

This article will help you understand it better if you’re ignorant of how the two are different.

Counting the Cost of Ignorance

And, just like the wayward, water plunging drivers there are some who are guilty of breaking the “Accounting Ignorance Law.”

And, what that looks like is, they don’t yet understand how they can be aided in growing their construction contracting business through correct use of their financials – and it is going to cost them.

Here is the deal. Average Joe Contractor isn’t the competition they need to be concerned about. It is the up and moving commercial construction contractor who has gotten savvier and more sophisticated. It also means the General Contractors (who are also more savvy) expect their subs to bring a better level of efficiency and expertise not only in the field, but also in the office.

This has led to higher expectations which makes the cost of not knowing what you’re doing with the financials much higher these days.

And its not just the competition or the GCs.

Counting the Cost in Construction Accounting

It’s the complexity of software, SaaS, apps, construction bookkeeping nuances, and so on.

One of the huge benefits of QuickBooks and integrated apps is how much information you can obtain from having all the correct input in all the correct places. Its job costing, bidding, accounts receivable management (with or without AIA style billings,) estimating, invoicing, timesheet data, reconciliation of balance sheets, WIP reports and supporting documentation, making appropriate bill payments, certificate of insurance management, project close-out documents management, and on and on.

What that leaves us with is that understanding (and using) all the great benefits you can get from QuickBooks and the supporting apps is more complex these days, and even more so now that you’re ready to Run With the Big Dogs.

So, my advice?

Don’t drive around the barricades!

And don’t leave your construction business accounting needs to wishful thinking or chance. It will cost you.

You can get in touch with us here or give us a call Toll Free: 866-629-7735.

Do You Really Need a Change Order?

Hang the moon and stars for your clients as often as you can.

Hang the moon and stars for your clients as often as you can.

Client requests

Strategy is involved when you determine what to do and what not to do when dealing with client requests. Be sure all your employees and subcontractors know what the strategy is and how to deal with the various circumstances.

In my last post I presented information concerning how to deal with the inevitable change orders which pop up during construction.

This time let’s look at when a client’s request for additional service or a change in production, materials, or labor should be carried out as soon as possible with no need for the process involved in change orders. You can’t always hang the moon and the stars for your clients, but you can give them the little extras that will help them remember you and your team.

Make it all about the client

Have you been burned by a client who is “ever needy,” who constantly asks for things outside the scope of work as presented in the contract, who seems hell-bent to make sure they get more than they’re paying for? Yeah, we’ve all experienced that sort of bad behavior. (Meaning that is another reason to be sure you prequalify your clients.)

Chances are, those people are few and far between. Yet, the natural tendency to protect ourselves and our businesses against that sort of terrible behavior may get in the way of “being there” for the clients who are simply relying on us to provide what they need at a reasonable price and within a reasonable timeframe.

Teach your employees and subcontractors that whenever possible, meaning when the request is financially and logistically feasible, to simply comply.

3 ways to handle “above and beyond” requests

We’ll use an entry door installation as our jumping off point for all the examples below.

Do it

Your employee has just finished hanging a new entrance door and the client asks if she will also attach the door knocker the client picked up on his way home from work. No, it isn’t in the contract. Yet, it is a simple matter to use the tools already at hand to quickly install the new door knocker.

Offer resources for what you can’t provide

Your subcontractor has just finished hanging a new entrance door and the client asks if he will also install a hard-wired door bell the client ordered and has on hand. Your subcontractor doesn’t have a clue about electrical wiring. Your subcontractor, as well as your employees, should have a list of preferred contractors and service providers on hand to provide to the client.

Explain why a change order will be necessary

Your employee has just finished hanging a new entrance door and your client asks if he will change the door out for one seen online which incorporates better security measures than the one which was just installed. Your team should be trained concerning how to politely inform your client a change order will be necessary.

Think beyond the simplicity of the task

Let’s go back to the second of the three ways to handle the request. Remember, your client has just requested that a hard-wired door bell be installed. Now, let’s imagine your subcontractor or your employee does have the skill required for the task. A few other considerations now come into play. How long will it take? Is the new door bell replacing an old one or is the wiring going to have to be installed also? Has the client exhibited a tendency to request more and more without regard to the original contract?

Your client is your first consideration

Delivering more than your client expects has long term benefits for your construction business. Good-will is worth the tangible (read monetary) as well as the intangible gain garnered by providing it.

The basic gain is the feeling engendered in being able to help another person. Then there are a few other considerations concerning what is to be gained when you and your crew go out of the way to provide truly exceptional service – by doing what you don’t have to do. Gaining word-of-mouth recommendations is (or should be) your number one marketing tool. Want your present clients to tell your future clients how wonderful your construction business is? Give them every reason to do so.

This is huge! There is no better time to ask for a testimonial or referral than when you or your team has given more than was contracted for.

Want to know more about assuring that your team is on the same page you’re on when it comes to responses concerning above and beyond requests? Be sure to check back next time, I’ll discuss implementing a “give it away” policy.

In the meantime, you can reach our construction accounting specialized team here or by calling 866-629-7735.

 

Another Construction Contracting Success Story

 

Frequently, what we do to aid our clients as they grow their construction contracting businesses is a steady process wherein the gains are best noticed in hindsight. After a few months of working with us we hear things like, “Yes, that is exactly how I always wanted it to be, but didn’t know how to get there,” or “I had no idea it would be that easy, thank you,” or “This makes so much sense now, we had been doing it wrong for so long I didn’t think we could ever get it straightened out.”

All those words of praise and thanks are wonderful for us to hear, and we are so glad to be able to make the lives of our clients easier while also helping them to gain a profit-making status they had not before been able to achieve. We tend to be like the proverbial cowboy who doffs his hat and says, “Just doing my job, mam, just doing my job.”

Yet, there are those times when we see such a noticeable change in such a short period of time that both we and our client are in a high-five mode.

Let’s backup

Before I go further with this success story, I think I need to backup and give you a little behind the scenes information. You see, we, like many others, have developed an “ideal client” profile. Obviously, our ideal client is a construction contractor. Here are the other things our ideal client is:

Tech savvy or willing to learn

Determined to scale their business

Accountable and responsive

Inclined to offer referrals

Willing to listen to and act upon our advice

Now back to the success story

A while back a contractor who had a dismal set of books contacted us. The books were so dismal, in fact, it was easy to see he was on the brink of bankruptcy. Yet. Yet, he did seem to fit into our ideal client profile.

After a few weeks of working with this contractor and realizing what was sorely needed was an infusion of the all mighty dollar, and knowing that getting a loan was not the best course of action, (heck, borrowing “affordable dollars” wasn’t even a feasibility,) our Construction Accounting Specialist, Tonya, stepped to the plate, gave the contractor some guidance, then stepped back to see if indeed he was “willing to listen to and act upon our advice.”

Sure enough, what was once a construction company owner only a few weeks away from needing to close the doors and walk away is now a force to be reckoned with in his field of expertise.

The guidance offered by Tonya was sound business advice, yet it wasn’t an easy task to accomplish. It took trust in the advice as well as a willingness to do things just a bit differently than had been done before. Well, when you get down to it, it took guts.

Perhaps we need to add to our ideal client profile, “has guts.” On second thought, that isn’t necessary. “Has guts” comes with the territory of “owns a construction contracting business.”

There you have it

Well, there it is, another success story that has us jumping around and high-fiving all over the place.

Do you fit our “ideal client” profile? Would you like to be among those savvy contractors who are taking advantage of the services we provide?

Give us a call 480-442-4032 or get in touch here.

The Top 5 Critical Problems Schulte and Schulte Solves for Owners of Construction Contracting Companies

 

When you first became a construction contractor or construction service business owner it was pretty simple – get a job, do the job, get paid, see how much money you made. Now, things are different. You have people working for you, people who rely on you in order to make a living.

Knowing the whats, hows, and whys of construction accounting has become much more difficult.

Following are 5 critical problems Schulte and Schulte solves for clients on a regular basis.

Not knowing how to maintain cash flow

“Projecting future cash flow is something I’ve never understood how to do.”

Solution: Once the system is implemented you’re “in the know” daily concerning all the angles of cash flow.

Not having proper records for the IRS and for other potential needs – like proving credit worthiness

“I’m not even sure what I should keep, much less how to keep it.”

Solution: Your records are brought up-to-date and kept current so you’re always ready for both the IRS as well as for investors or loaning institutions.

Constantly having to chase work to build revenue

“It seems if I’m going to make money I always have to find new work (some I don’t even want to do) and it drains my time, energy, and capital. There’s got to be a better way.”

Solution: You’re taught smarter ways of maximizing revenue rather than the eternal work chase.

Not understanding their job costs

“I know it is more than just what I pay my people and how much I paid for supplies, but I’m not sure what all goes into job costing.”

Solution: You know what the job costs are for each job and for each type of job, giving you valuable insight concerning future jobs.

Not having enough time in the day to do it all as a small business owner

“I don’t hardly have time to breathe, much less time for figuring out all the ins and outs of construction business accounting.”

Solution: You’re relieved of trying to “figure it out.” The Schulte and Schulte pros take away much of the “drudge” of bookkeeping while informing you regularly about the financial health of your construction contracting or service business.

Solution: Maximizing Your Profits.

Now that you know we offer solutions for your critical problems, it is time to stop messing around and trying to figure it out yourself. Reach us through this number 480-442-4032 or get in touch here.