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.
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
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
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
City Governments can require their
revenue reports and payment due Monthly, Quarterly,
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
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QuickBooks Desktop In The Cloud has the most
flexibility in providing reports for all the of Contractors. From
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Contractor, Custom and Spec Home Builder and Commercial TI
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.
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 email@example.com
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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.
Randal DeHart | The Contractors Accountant
#1 EZ Step Interview inside QuickBooks Setup
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#3 They Attended A How To Setup QuickBooks Class Or Seminar
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