Jun 3, 2022
This Podcast Is Episode Number 474, And
It's About Bad Business Practices In Construction
Bookkeeping
One of the biggest challenges construction company owners like
you have with an in-house bookkeeper is training them to work for
your best interest, not theirs, and deliver consistent results and
the reports you can trust daily, year after year.
Having been involved with construction and construction
accounting and bookkeeping for over thirty years, we have seen a
consistent pattern repeated over and over that will turn ordinary,
decent, pleasant bookkeepers into a disheveled, broken, mean,
nasty, arrogant trolls, and that's a good day when the sun is
shining, and the birds are singing!
Here's
how it happens:
- Someone is assigned the
construction bookkeeping duties, and they are typically
mild-mannered, shy, and unable to say no. The newly appointed
"bookkeeper" opens the QuickBooks Pandora's box and loads the CD in
the computer, believing it will be set up and ready to go in ten
minutes.
- That's when the first of
several unpleasant surprises happens; the pop quiz. QuickBooks
screens start popping up and asking questions! Nobody said anything
about a test or an exam, and panic began to take hold.
- The bookkeeper thinks,
"don't screw this up because I can't afford to lose this job!" The
questions keep coming like a raging river, so to put the
responsibility on someone else, the bookkeeper asks the contractor
for help and is told: "I don't know, you're the bookkeeper. Go
figure it out. I'm busy!"
- Luckily QuickBooks has a
guided tour of QuickBooks setup; unfortunately, the bookkeeper
charges forward, taking all the default answers suggested by
QuickBooks, and in just over two hours, QuickBooks is set up
horribly wrong.
Choosing the correct
QuickBooks Version is the most critical part of 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 to operate
and grow your construction business profitably.
Contractors who do not earn
much money see bookkeeping as overhead which costs money and
therefore is a drain on profits, so they get a cheap computer, tiny
monitor, garbage printer, tiny desk, and broken-down
chair.
- The contractor assigns
additional tasks to the bookkeeper to get their money's worth. "Go
fetch" and do everything - like personal errands, delivering
materials, supplies, and paperwork to the job site, handing over
all usernames and passwords to buy and pay stuff, making coffee,
answering the phones, taking out the trash, cleaning the
bathroom—anything and everything to get "value" out of the time and
money wasted on bookkeeping.
- Contractors can miss many
deadlines but miss a payroll, and they are out of business. The day
that happens, your staff is looking for a new job no matter what
they tell you. The contractor gets angry, makes deep noises from
the chest sound like important messages from the brain, and blames
the bookkeeper for the missed payroll.
- What has now evolved into
the incompetent bookkeeper will respond with something like: "The
time cards never arrived, so I could not process payroll!" The
contractor simply responds with something like: "You should have
figured out how to get them even if it meant using your car, your
gas, your personal time and have gone to the job site and got them;
it's your fault! I depended on you to do your job, and you let me
down!"
- This is where the ordinary
decent, pleasant bookkeeper starts growing an attitude, thinking
you don't understand how complicated bookkeeping is with a program
like QuickBooks that is all screwed up and won't work right!
Getting anything done in QuickBooks is an immense fat royal pain,
let alone all the other stuff the contractor wants to
do.
- The bookkeeper thinks you
don't know or care because you hired them to take care of the
paperwork, and that is precisely what you did because in business,
you produce reasons or results, and reasons don't
count.
- Next, your vendors and
suppliers don't get paid on time, or worse yet, you miss the 2%
discount if paid by the 10th, which in effect means you are paying
a 36% annual interest rate penalty, and when you ask why, the
bookkeeper says they didn't have enough time to get the bills into
QuickBooks.
- Next, the payroll tax
returns, sales tax returns, labor and industries tax returns,
business and occupation tax returns, city licenses, and liability
insurance audits start slipping, and the fines and penalties add
up.
These bad business practices
can frustrate you or any construction business owner because you've
now realized it is a costly mistake. These do not even include
overpaying income tax, lost productivity due to stress, and several
other unknowns.
Now you have three responses;
fight, flight, or replacement. Fight and demand could get it done,
but how reliable (your reports) will it be? Flight and hiring
another in-house bookkeeper could only repeat the process. Or you
can save time, money, and aggravation by outsourcing to a competent
construction bookkeeping service. The choice is yours; consider it
before allowing these bad business bookkeeping practices to drive
you insane. Protect yourself and your business. As we always say,
you deserve to be wealthy because you bring value to other people's
lives.
About The
Author:
Sharie DeHart, QPA is the co-founder of Business
Consulting And Accounting in Lynnwood, Washington. She is the
leading expert in managing outsourced construction bookkeeping and
accounting services companies and cash management accounting for
small construction companies across the USA. She encourages
Contractors and Construction Company Owners to stay current on
their tax obligations and offers insights on how to manage the
remaining cash flow to operate and grow their construction company
sales and profits so they can put more money in the bank. Call
1-800-361-1770 or sharie@fasteasyaccounting.com