Sep 18, 2015
Downloading from the bank is easy and saves time; however, it does not allocate the transactions for accurate Job Costing Reports. The two main reasons highly profitable construction contractors use Job Costing Reports:
#1 It is the foundation of your construction company unique "Job Costing Library". This helps you estimate new projects using historical data.
#2 It is part of your Business Process Management Process that
can help you understand when, where, how, why and who you make and
Some transactions will need to be split into parts for example a loan payment may have part of the money assigned to Principle and the rest to Interest. Bank feeds and downloading from the bank works great for roughly 80% of the businesses and the other 20% like construction it causes major disasters which will go unnoticed until the contractor wakes up in a panic and asks the all important question every contractor asks when they realize they are in deep financial trouble:
Bank feeds and bank downloads are something the banks hate because of all the technical support and angry customers they have to deal with after the disaster hits. They offer it anyway to satisfy their customers and just hope the fallout is not too terrible.
Most of the time every transaction is dumped into a random account in the Chart of Accounts. The first time you downloaded a purchase from Home Depot it went into material the next time it was a tool and that went into material the next time it was office supplies and went into materials the next time...who knows where the wild goose goes?
Tax preparation folks love bank downloads and bank feeds because it makes their job easy and if you get audited or pay more income tax than you should, oh well.
In the mid 1960's something profound occurred in a bike shop
near Greenlake in Seattle, Washington while I was shopping for a
bike helmet. I browsed the selection of helmets and asked the
clerk for a "cheap helmet" because in my mind all bike helmet were
the same and I was not about to be ripped off. He had a profoundly
simple answer: "If You Have A $10 Head Buy A $10 Helmet"
He said it with a deadpan face, no expression and he acted as if he could not care less about what helmet I purchased.
I remembered something my Step-Father used to say "Buy the best you can afford and cry once, rather than buying the cheapest and crying about it not doing what it was intend to do forever." He was a simple man without a lot of formal education and yet one of the wisest men I have ever known.
I purchased the most expensive helmet I could afford and it saved me from experiencing several injuries over the next few years.
Recently a roofing contractor contacted and said his tax accountant charges $200 a month to download from the bank into some kind of program, could be excel, quicken, QB who knows what; but the financial and job costing reports don't make any sense. He wanted someone to take over the contractor bookkeeping services and do it right for less than $200 a month.
We said yes we can do it right, but not for $200 a month. In the long run and we might be able to reduce the amount he pays in taxes and increase his roofing company's cash flow and profits which could mean that our services could pay for themselves put more money in his bank to operate and grow his roofing company.
As we understand it that particular contractor is now bankrupt. I suspect it was partly due to bad bookkeeping practices and part due to the economy.
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 firstname.lastname@example.org
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