Successful contractors understand how and why the business
cycle of construction works through implementing these actionable
steps:
Examine all your processes
Take a long hard look at your construction company and list
all of the recent mistakes, warranty work, rework, and
time-wasters. Then develop a project plan to remove them, one at a
time.
Often your office staff is working with
misinformation:
- a receipt without a job, name, or address (or any note)
which job it goes to
- a bank statement that only shows the date the check
cleared
- the check number and the amount without any information
regarding who it went to, why, or a job name
Office staff believes field workers are lazy and incompetent;
field workers believe office staff is too nosy and wasting field
workers' time. Many times field workers will bring receipts for
material, fuel, permits, or something else they paid for personally
to the office, expecting to get reimbursed immediately. Most of the
time, the paperwork does not have the job name or any authorization
from you or your management team, and the office staff is reluctant
to pay it. Again field workers judge the office staff is trying to
cheat them or at a minimum, playing power-tripping games.
Spend some time with your field workers. Observe how they
perform their work and understand what they do and why they do it.
The number of steps required to mobilize on a job site and get
tools, material, and field workers in place is a process in
itself.
These little delays and setbacks contribute to everyday
misunderstandings, which lead to a massive decline in productivity
and steep deterioration in cash flows and profits. Find and
stop cash flow leaks and profit drains by examining your processes
and walking a mile in the shoes of both office staff and field
workers.
Eliminate paperwork
One of the biggest struggles contracting business owners deal
with is the overwhelming amount of paper they have to organize as
part of their everyday tasks. Invoices, receipts, bills, contracts,
client records, pay applications, insurances, licenses - are just
among the few in the seem to be "never-ending etc." Keeping
important documents is necessary. Most contractors go from one
extreme to the other. One extreme is saving everything for decades,
and the other is tossing everything out.
What to save? What to toss out? At Fast Easy Accounting, we no
longer need to print and save every document in file folders and
keep adding new file cabinets. Our paperwork processes ensure your
happiness and peace of mind knowing that your papers can be
retrieved electronically at any time in the future.
Empty inventory
Empty your trucks and vans, clean out the dirt and grime, and
when you restock, see how much you can leave out. This one thing
can have a massive impact on cash flow and profits. If you can
increase your miles per gallon of fuel from 10 to 12, you will have
increased your earnings from fuel savings by 20%. Let's run the
numbers:
If you stock your truck with
every tool and load it to the sky with all the parts and inventory
you think you may need and drive hard and fast, you are maximizing
that resource, and that is not a good thing.
Benefit -
Hopefully, fewer trips to the supply house, Lowes, Home Depot, or
other places which will save you a little bit of time and
money.
Costs - You will end up spending more money for each mile
you drive because you use more fuel, your brakes will wear out
faster from having to stop with more weight. Your tires will wear
down quicker, and your vehicle suspension parts will need to be
replaced sooner rather than later. You will have money that is tied
up in tools, equipment, and inventory that could be invested
elsewhere and make more money for you. Even worse, if you have any
credit card debt or loans, that money could be used to pay them
down and reduce your interest expense.
Risks
- If you get involved in a
traffic collision and the investigation reveals that you have
exceeded the Gross Vehicle Weight Rating (GVWR) of your truck or
van, then it is likely your insurance may not cover the damages.
Besides, you may be liable for negligence charges. We recommend you
contact your insurance agent and your attorney for their
advice.
In conclusion
The office ensures your contracting company has a steady flow
of projects. Proper accounting and bookkeeping develop timely
financial reports to show which jobs are profitable so you can
pursue more of them, thus, you can focus more on:
- Acquiring the right clients
- Doing the project as close to on-time and on-budget as
possible
- Get job deposits and timely progress payments
- Follow-up with clients to monitor satisfaction and line up new
projects
The key is continuously refining your construction company's
best practices and procedures. Enlightened contractors like you
understand the value of developing your own unique Construction
Contracting System, which is a collection of documented repeatable
processes and operations manuals.
Lost and tired of your bookkeeping system? If you are using
QuickBooks and doing your own books (or have staff doing it for
you), I recommend you head on over to our
Construction Accounting Academy site
and check all the classes available to you immediately. Master the
skills needed to generate useful reports, repeat quality
performances, and make informed decisions to operate and grow your
construction company.
About The Author:
Randal DeHart, PMP, QPA is the
co-founder of Business Consulting And Accounting in Lynnwood
Washington. He is the leading expert in outsourced construction
bookkeeping and accounting services for small construction
companies across the USA. He is experienced as a Contractor,
Project Management Professional, Construction Accountant, Intuit
ProAdvisor, and QuickBooks For Contractors Expert. This combination
of experience and skill sets provides a unique perspective
which allows him to see the world through the eyes of a contractor,
Project Manager, Accountant and Construction Accountant. This
quadruple understanding is what sets him apart from other Intuit
ProAdvisors and accountants to the benefit of all of the
construction contractors he serves across the USA.
Visit http://www.fasteasyaccounting.com/randal-dehart/ to
learn more.
Our Co-Founder Randal
DeHart - Is a Certified PMP (Project Management
Professional) with several years of construction project management
experience. His expertise is construction accounting systems
engineering and process development. His exhaustive study of
several leading experts including the work of Dr. W. Edward Deming,
Michael Gerber, Walter A. Shewhart, James Lewis and dozens of
others was the foundation upon which our Construction Bookkeeping
System is based and continues to evolve and
improve. Check out our Contractor Success Map Podcast on
iTunes.
