Apr 3, 2015
Lately We Are Seeing An Increase In QuickBooks Journal Entries
Journal Entries - Are a quick and dirty way to get transactions in without putting forth time and effort to enter each transaction. In the short run you save time; in the long run you can forget about accurate Job Cost Reports.
Credit Card Statements - Are the most common example we see followed by vendor statements from lumberyards, Home Depot, Lowes, concrete suppliers, plumbing and electrical suppliers and others.
The Bookkeeper - Shuffles through a pile of paperwork or electronic documents and finds a credit card statement and notices that it has a lot of transactions. Depending on how well the bookkeeper has trained the contractor is what determines whether the transactions are properly entered and the costs assigned to a job using the item codes or if there is one giant Journal Entry.
Using Journal Entries - Means there is no place to record the Job Cost information which some contractors call Schedule of Values, CSI Codes, SOV, WIP and a bunch of other labels used to describe the terms that are common to both construction accounting and construction project management.
We Have Seen - Hundreds of situations where a regular bookkeeper has put together one giant Journal Entry instead of properly coding and inputting each transaction and then told the contractor QuickBooks will not produce accurate Reports of any kind. In a few situations, the bookkeeper has suggested we should use our influence with QuickBooks to get them to fix the problem.
We Do Our Best Not To Say - That we are looking at the problem, a bad bookkeeper not properly trained in construction accounting. Unless and until the contractor is willing to pay $25,000 to $50,000 for their education, and pay their salary for the time, they will spend in classroom instruction and homework the problem will not be solved.
However, for a fraction of the cost they could outsource the bookkeeping to us and not worry about it frustrated because they heard from someone else that we can make QuickBooks sing and dance and do amazing things and that Job Costing is only a tiny little part of what we do!
We Can And We Do - Every day of the week and Job Costing is only one of the tips of the QuickBooks Construction Accounting Iceberg.
QuickBooks Setup - And choosing the correct QuickBooks Version is the most critical part of being able to generate accurate QuickBooks Reports including Job Cost Reports all because it is the foundation upon which your entire financial system is built. Put the wrong foundation under your business and it will not matter who is doing the bookkeeping because it will always be a mess and you will never get the reports you really need in order to operate and grow your business profitably. Your Board of Advisors and especially your banker will be unhappy; however, they may not say it outright, just that your loans, lines of credit and referral opportunities may be limited.
Four Things To Watch For That Could Be Killing Job Cost Reports
1. Are there more than three Journal Entries a month?
2. Are credit card charges and payments being recorded with Journal Entries?
3. Are supplier and vendor bills and payments being recorded with Journal Entries?
4. Are the Job Cost and Job Profitability Reports vastly different from the Profit And Loss Reports?
We Have A Bookkeeping System - And checklists for everything and including a Quarterly Review Checklist to make certain all transactions are properly coded based upon the electronic and paper documents our clients provide us.
If Your Intention Is - To someday sell your business and retire excessive Journal Entries will not help you get the best possible price because there are a number of financial ratio’s that will not calculate using Journal Entries.
From An Accounting - Point of view there is nothing wrong with Journal Entries and many companies operate with a set of Journals, Ledgers and Sub-Ledgers and they generate financial reports and file taxes with no problems at all.
From A Project Management - And business planning perspective the opposite is true because accounting looks backward into historical records to determine what happened and why. Project Management, Business Planning and Forecasting looks forward and bases projections on accounting records in the form of financial ratios, job Costing and uses S.W.O.T. Analysis to determine the best place to focus your company's limited resources in order to optimize 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 firstname.lastname@example.org
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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