Mar 31, 2017
Today’s technology says “Do Everything On Your Phone”
Use an app to create an estimate, or better yet just send the estimate in the body of the email. That works when the customer’s reply is “Do It”.
Great you start the job, finish the job, never send the customer an invoice; Why – They Don’t Need One – they know how much to pay from your original email. and you Included short explanatory paragraphs about each item of work you did.
You move on to the next job. Weeks
go by. If the customer is expecting a “formal invoice” and do not
plan to pay until they receive one. More time passes; you are
waiting to “GET PAID” and the customer is waiting “To Pay You”.
Some customers will take the extra effort to call, leave a message,
text, or email you asking for the invoice so they can pay.
MANY customers will say nothing until The Contractor sends the
invoice they are NOT Paying and NOT doing any follow up. Months go
by, and still, no check arrives.
Many contractors think they have someone who hasn’t paid but are
unsure of who the customer was. Often times the contractor feels
too much time has passed and doesn’t try to go back and bill old
customers.
What came in the mail was all of the supplier invoices for the job.
All of the subcontractor invoices, and YES, the payroll for the job
has been paid. The person who did NOT get paid was The
Contractor.
Get The Money, Collect Ongoing Payments, Get Job
Deposits – Use Customers Funds for Material. DO NOT BE THE BANKER
FOR YOUR CUSTOMER! Contractors are not bankers!
First Step No matter what app you use. Make sure it has a “mini”
invoice program for emailing customer an invoice. You can then go
back and have a paper trail that you asked the customer for
money.
Second Step Track your time Use T-Sheets to keep track of the
jobs you were on. (This is good for Contractors who do not have
employees) What If you have to lien the job?
One of the questions are when was the last day on the job? The answer could be the difference between having any lien rights and collecting the money or getting nothing but attorney or lien service fees.
Use a
Lien Service for Notice to the Owners on larger jobs. Double
check with your supplier. Does the supplier send out Notice to the
Owner? Even if your Lien Rights are gone – Maybe your Supplier’s
Lien is Valid and Collectable.
Third Step Accept Credit Cards. More customers have room
on their credit card than “Cash In The Bank.”
Getting Money Now offsets the fees
charged by your Merchant Service Provider. Many services that offer
invoice programs (Estimating Software, Dispatch Software, Invoice
Software) have an add-on feature for Merchant Services.
Customer follows the link, puts in their credit card number or bank
routing and account number for easy payment. Again, worth the
fees to GET PAID NOW!
Behind the scenes, every Contractor should do additional
Bookkeeping. Some invoice programs will track the payments
received, but that is the extent of the bookkeeping. The
Contractor’s Bookkeeping needs go beyond sending an email to the
customer with the price of the job and taking the check to the
bank.
A proper Construction Contractor Bookkeeping
System is setup to create a Customer Invoice. Receives Payment.
Seeing the balance if anything is owed. Accounts Receivable
Aging Report is one of the reports banks look at before giving you
a business loan.
Bankers want to know What is your volume (sales) What have you
collected (customer payments) and How Much Do Customers Still Owe
You and finally How Long Does It Take You To Collect. In some
industries 30-60 days is common.
I have heard stories about larger retail stores who paid promptly
after the first 6 months. It was surviving the first 6 months that
was hard for smaller suppliers and Tenant Improvement
Contractors.
Accounts Payable is
keeping track of the bills owed to a supplier or
subcontractor.
A proper Construction Contractor Bookkeeping
System uses the Accounts Payable feature to track the unpaid
bills. Again, the Banker wants to know how long it takes to pay
your bills. The Bank wants to get paid and unlike The Contractor
who is embarrassed to call an old customer; The Bank is very
willing to Call Early and Often for any outstanding payments
due.
Another reason to keep A proper Construction Contractor Bookkeeping
System is so you don't Over Pay a supplier or subcontractor,
cell phone, the internet, liability insurance, vehicle insurance
and more.
The bills keep coming and depending on your payment schedule you
may receive the Past Due Reminder Notice before the Original Bill
has arrived. Some utility companies have a history of what appears
to be randomly sending Original Bill
Some insurance companies if you do not immediately pay the invoice
when it comes then the payment will be late and subject to a late
charge. Based on where the Out of State payment needs to be mailed
to it may be impossible to mail (by regular mail) and be received
on time.
Hence – Online Payments Accepted. The benefit to The Contractor is
proof the payment was made with a time and date stamp (Print) and
usually an auto-generated email as backup confirmation that the
payment was made.
Overpaying Sub Contractors can easily happen if checks are written
on the job site. When using Hand Written checks be sure to use
“Carbonless Checks” to have a written record of payments made. The
payments than can be added to the Bookkeeping System without
waiting for them to clear.
Bankers like the reports from a Formal Contractor Bookkeeping System
(QuickBooks for Example)
It is an easy to understand report. Bankers can usually tell
if the numbers are off because there is missing transactions, no
enough income, too many expenses.
Contractor’s who do their own bookkeeping and are
sometimes “Just Lost” Depending on the banker they use.
Whether or not you get the loan or line of credit, you are after depends heavily on the way your Financial Reports are put together. The Net Result is that the Rates and Fees charged maybe higher and Amount Loaned maybe lower than expected!
Another Group That Likes Formal
Bookkeeping System is the Local, State, and Federal Governments
(IRS)
City Governments can require their
revenue reports and payment due Monthly, Quarterly,
Annually.
In Washington State; The
Department of Revenue can make every contractor report and pay
their Sales Tax Liability Monthly. For Companies with employees,
Washington State Payroll taxes are due Quarterly.
The Internal Revenue Service want the 941 Quarterly Payroll Reports
filed Quarterly. If tax liability for the Quarter is over $2500.00,
then the payments are due Monthly. Larger companies have to pay
their payroll tax liability at the time of each payroll. Reminder
Estimated Tax Payments are due Quarterly.
Our Contractor Clients Enjoy Having QuickBooks
Desktop Version In The Cloud
Paperless System For You
To Store, Print, E-mail Documents
Just A Few Mouse Clicks On PC Or Mac And Get:
QuickBooks Desktop In The Cloud has the most
flexibility in providing reports for all the of Contractors. From
Brand New Startup, Handyman, Specialty Trade Contractor, General
Contractor, Custom and Spec Home Builder and Commercial TI
Contractor.
Every contractor, even you, have common needs that QuickBooks can
easily provide. With our Customized QuickBooks Setup we are able to
setup QuickBooks to meet the additional needs of the individual
contractors.
In The Future: As your Contracting Business grows and changes you
may find additional services located on Fast Easy Accounting Store
https://www.fasteasyaccountingstore.com/ that may be useful and
helpful. Consulting is always available. (Outsourced Accounting
only available in the USA)
We Help “A Little” or “A Lot” Depending On Your Needs.
Enjoy your day.
Sharie
I trust this podcast helps you understand that outsourcing your contractor's bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking a holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now, and if you have listened to this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
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One more example of how Fast Easy Accounting is helping construction company owners across the USA including Alaska and Hawaii 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 construction contractors like you so stop missing out and call Sharie 206-361-3950 or email sharie@fasteasyaccounting.com
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
This guide will help you learn what to look for in outsourced construction accounting.
Need Help Now?
Call Sharie 206-361-3950
Thank you very much, and I hope you understand we do care about you and all contractors regardless of whether or not you ever hire our services.
Bye for now until our next episode here on the Contractors Success MAP Podcast.
Warm Regards,
Randal DeHart | The Contractors Accountant
#1 EZ Step Interview inside QuickBooks Setup
#2 Asked Their Tax Accountant To Setup QuickBooks
#3 They Attended A How To Setup QuickBooks Class Or Seminar
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