Apr 10, 2015
In an attempt to save money, the cheap contractor does the following and ends up spending the most money and earning a tiny profit because they believe in Maximizing over Optimizing. In the short run Maximizing can payoff; however, in the long run it never does.
This article is a bit strong and it could offend some folks. If it offends you, please accept my sincere apologies. I tend to tell it straight and not sugar coat anything because I have been involved in the construction industry most of life beginning with working in my Step Father's construction company after school in the mid 1960's.
During my lifetime, I have seen too many contractors work hard, never have enough money to retire. Some of them die from exhaustion and others just wore themselves out and lived their final years in poverty and only a few, less than 5% ever made enough money from owning and operating their construction company and outside investments to retire early enough and enjoy a comfortable lifestyle.
Part of our mission here at Fast Easy Accounting is to help as many contractors as we can to shift their Paradigm and become one of the top 5%.
Overloaded Construction Vehicles Cost More Money Than They Save
Example #01 They overload their vehicles beyond what they are designed to carry
They believe the truck manufacturer "Low-Balls" the Gross Vehicle Weight Rating (GVWR). For a short read on this subject, click here to download a white paper. For more in depth information on GVWR please visit Model Minimum Uniform Crash Criteria they have extensive data on this subject.
Excess Weight Causes:
Cheap Tools Cost More Money Than They Save
Example #02 They buy the cheapest tools they can find
They believe buying tools based on the price not the Total Cost Of Ownership (TCOO). The total cost of ownership has to take into account what ten minutes waste cost your construction company
Cheap Tools Waste Time And Money:
Every Ten Minutes Your Construction Worker Costs You $5.94
Every Ten Minutes A Day Of Unproductive Construction Worker Labor:
For Employee #01 Could Cost The Company $1,544.42 Each Year
At 10% Profit You Need $15,544.20 More Sales To Maintain Profit Margin
For Example - Your best construction worker asks for a tool:
In This Example - It may make sense to finance the purchase even if it means using a credit card at 12% interest because the net return is $3,289.36, which is 245% ROI. See below:
QuickBooks Online Is A Recipe For Disaster For Contractors
Example #03 They try to make QuickBooks Online work
QuickBooks Online is a great product for many companies, but not construction. The primary reason is contractors are one of the few companies that pack their entire company into trucks and vans, drive it to their customer's location. Then they put together a custom built product which means the margin for error is enormous and break even calculations are a moving target can only be done in a properly Setup QuickBooks File Designed Specifically For Construction Accounting.
Most companies have a fixed location where customers come to them and they sell prepackaged products which they know exactly how much margin they need to sell everything for in order to earn a profit and stay in business so their company breakeven is very simple to calculate.
Contractors Using QuickBooks Online May Experience Some The Following Issues
1.Limited Job Costing Reporting
2.Limited Sales Tax Reporting
3.Limited Custom Reports
4.Limited Report Formatting
5.Limited Detail On Reports
6.Limited Filtering Of Reports
7.Limited To One Window
8.Limited Tech Support
9.Limited 3rd Party Apps
10.Slow Response Time
11.Wasting Time Moving Between Windows
12.Cannot Easily Link Multiple Companies
14.Importing multiple transactions
15.Importing IIF Files
16.Updating Chart of Accounts
17.Work-In-Process (WIP) Reports
18.No Inventory Reporting
19.Problems With Retention Held Reports
20.Problems With Retention Due Reports
21.Purchase Order Tracking
22.Job Progress Invoice Tracking
23.Corrupted Trial Balance Reports
24.Corrupted Financial Reports
25.Cannot Create Item Reports
26.Cannot Backup Before Performing Major Revisions
27.Too Many People In The File
28.QuickBooks Online Is Like A Doorknob Where Everyone Gets A Turn
29.Not Enough Controls To Keep Amateurs From Really Causing Problems
30.Tax Accountants in an effort to make QuickBooks online easier for them
31.Pages Regularly Become Unresponsive The Program Needs To Be Restarted
QuickBooks Online is a great program for small companies including some non-profit organizations but it is not suited for a serious construction contractor with more than two projects a month and generating more than $500 a year in sales.
Most Construction Companies started using QuickBooks Online so they could get to their QuickBooks Pro or QuickBooks For Contractors file anywhere they have internet access 24/7.
We Can Move Your QuickBooks Online File Into Our Private Cloud Server And Provide You With The Full Power Of QuickBooks Desktop Version Online In The Cloud!
Access QuickBooks Desktop Version From Your PC or Mac
Highly Skilled Technicians Maintain The Software
And We Maintain Your QuickBooks File
Push A Button And Have
1.Paperless System For You To Store, Print, E-mail Documents
2.Microsoft Is On The Server For You To Use
3.Microsoft Excel Is On The Server For You To Use
4.Key Performance Reports Every Contractor Needs
5.Cash Report anytime YOU want it!
6.Receivables report anytime YOU want it!
7.Payables report anytime YOU want it!
8.Profit & Loss statement anytime YOU want it!
9.Balance Sheet report anytime YOU want it!
10.Job Costing report anytime YOU want it!
11.Estimates Vs. Actuals report anytime YOU want it!
12.Frequently Asked Questions And Answers Click Here
QuickBooks For Contractors Is Running Smoothly On Cloud Based High-Speed Servers 1,000+ Miles Away From Our Office In Lynnwood Washington with redundant backups offsite
Tucked Securely In A Building With Armed Guards
With Highly Skilled Technicians Maintaining It
All QuickBooks Files Are Backed Up Every Night On A Secured Server
Access Windows QuickBooks Desktop Version From PC or Mac
English Speaking, U.S. Based Technicians Maintain The Server
QuickBooks Software Updates Are Automatically Applied
We Provide Your QuickBooks Maintenance And Support
Frequently Asked Questions And Answers Click Here
But Wait There's More!
Our Contractor Clients Have 24/7 Access To QuickBooks Contractor Financial Reports!
Just when you thought our special brand of outsourced contractor bookkeeping services couldn't possibly get any better...it does...yet again!
We provide professional contractor bookkeeping services primarily for construction company owners with annual sales volume $0 - $5,000,000 using the full desktop version of QuickBooks For Contractors which rests on an Intuit Approved Commercial Hosting Service.
On demand 24/7 internet cloud based access to your QuickBooks Reports including Profit & Loss, Balance Sheet, Receivables, Payables and more without having to own or open QuickBooks For Contractors!
Example #04 They get the cheapest bookkeeper they can find
The cheap contractor thinks all bookkeepers are the same; however, they bristle at the suggestion all contractors are the same. It is true that almost anyone can do bookkeeping because 95% of it is boring and only 5% is sheer terror. However when the regular bookkeeper attempts to do construction accounting that is like watching a naked person, covered in honey getting into a fight with a grizzly bear in the woods; it never ends well.
Until Your Construction Company - Reaches at least $5 million in annual sales you cannot afford to hire a qualified bookkeeper or construction accountant full-time to put on your accounting staff because there is no such thing as a part-time qualified bookkeeper or construction accountant.
For Example - You Hire someone with bad habits who is a Cheap Bookkeeper part time at $15.00 an hour for 10 hours a week thinking you will save money. The problem with that is you may not understand the true cost to have them on your payroll, including overhead, is closer to $25.29 per hour.
Every Ten Minutes Your Bookkeeper Wastes Costs You Money!
Every Ten Minutes A Day Of Unproductive Office Labor:
Could Cost Your Company $273.93 Every Year
At 10% Profit You Need $2,739.30 More Sales To Maintain Profit Margin
Everybody Loses When A Contractor Goes Out Of Business Or Worse Yet Bankrupt!
It May Seem Harsh - In order to survive and thrive as a contractor you must make certain your employees are focused on their job during the time you are PAYING THEM TO WORK! You must do whatever it takes to enforce the rules of engagement for producing results at your contracting company or be prepared to work for some other contractor and live under their rules.
Plugging Some Of The Little Leaks Listed Above Can Be Done Without Spending A Dime!
Some Will Require Investment; Consult Your Construction Accountant For Advice!
In Some Cases - We can do more work for less money by providing you with real construction bookkeeping and accounting + payroll processing + monthly and quarterly tax reports + year end W-2, W-3 + profit and growth management consulting + financial and job costing reports + paperless data storage and more at a lower overall cost and as an added bonus show you how to make more money than you are now!
Two Contractors Doing Similar Work - For similar customers with the similar direct and indirect construction costs will have massively different KPI Reports including the Profit and Loss Statements. Size matters when it comes to piles of money and bigger profits!
I trust this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking 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 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.
I trust this will be of value to you and your feedback is always welcome at www.FastEasyAccounting.com/podcast
This is 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
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
Need Help Now?
Call Sharie 206-361-3950
In closing, I want to caution you that we may or may not be a good fit for your contracting company. This guide will help you learn what to look for in outsourced construction accounting.
Thank you very much and I hope you understand
we really 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 | Contractors Accountant