How Construction Bookkeeping can change your Business.
What can bookkeeping do for your Construction Company? Bookkeeping is a service that all construction businesses need. Generally speaking, bookkeeping is the process of recording, categorizing and analyzing every financial transaction that occurs in an institution, whether such institution is personal or business in nature. However, within the construction industry this bookkeeping process helps you and your project managers oversee every construction job from start to finish.
There are many tools for bookkeepers to use in construction accounting. Papillon House Bookkeepers use QuickBooks, the current industry standard in accounting software, to help keep track of a business’ day to day transactions and run the financial reports necessary to assist a business in its organization and planning.
The first job of a bookkeeper is to set your company up for tax time. This saves you time, money and headache. It takes away the surprise of tax season and allows you to better plan throughout the year. QuickBooks solves that task seamlessly.
The second job of a Construction Bookkeeper is to allow the business owner to have clear a financial picture for where their money is, what it’s being spent on, and how to better plan to get more of it. This is how Papillon House makes excels. As the owner/operator of Papillon House, I grew up in the construction industry. My grandfather was a GC and I’ve learned the in’s and out’s of how the industry functions, what the common pitfalls are and how to avoid them.
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Because of this “at your knee” knowledge that was just a part of my life, there is significantly less training that needs to happen when we become a team. Everyone’s company is different so there is always a learning curve but, I don’t need to have common terms like “draw request” or “schedule of values” explained to me.
In fact, I even have my own templates to help you create those records, should you need them. I already understand that labor costs should be around 25%-35% of the job and that without good financial reporting you can’t hope to bid the next job- let alone determine whether the current job is profitable.
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Key financial statements prepared by a bookkeeper can help you understand what your finances are, and help guide you long term to make better and more informed decisions on how best to take the company where you want it to go, also known as forecasting. There are many different reports to choose from, but the most common in construction are:
Profit & Loss Statements
The Profit and Loss report, also known as an Income Statement, shows the revenue and expenses of your business over a particular period of time. Typically, these reports are produced monthly, quarterly and annually.
Balance Sheets
A Balance Sheet is a snapshot of your companies finances at any one point in time. This report is used for business planning.
Statement of Cash Flows
A Cash Flow Statement is a record of the money (cash, electronic payments, etc.) entering and leaving your company. This can help you identify and budget particular categories of income and expenses.
At Papillon House Bookkeeping, we understand that every construction company is unique with their own construction contracts. We make certain that with each construction project you take on, you have all the key financial information necessary to take each project from planning and development to completed contract with less headache and more certainty.
What Else Do WE Do?
Do you have bills from vendor bills that need to be tracked or invoices that need to be managed? In any business there are always bills and invoices but in construction there are always more. At Papillon House Bookkeeping we are more than aware of this.
In addition to the reporting services mentioned above, Papillon House Bookkeepers will manage your business’ accounts receivable and accounts payable. This means that we can track and organize moneys owed to you by customers, and moneys you owe to suppliers, vendors and employees. We do this a few ways depending on the needs of your company.
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It is important to remember that ALL bookkeeping is done retroactively- we cannot access bank statements until the month is over but we try to perform as many tasks in “real time” as possible. Depending on the volume of bills that need to be input into QuickBooks we can solve most business owner’s needs through an email system.
We can then input these bills into the system and run an unpaid vendor report monthly or bi-weekly to ensure nothing has been missed and get with the office manager to ensure payment has been made. That satisfies the AP side of the business.
Invoicing depends on the business as well but typically companies invoice monthly or bi-weekly.
Dependent on the schedule and “blackout” dates where billable time does not count towards the current month, but instead the following month, we can collect all the data needed to go on the current invoice and either send it to the office manager (or business owner) to go to the customer or, if you have the function available, we can send directly to the customer through QuickBooks. This makes the Accounts Receivable side of the business a breeze.
Job costing is what everyone wants but... it is a massive time and cost commitment.
Home depot does NOT integrate with QuickBooks- even though it says that it does. This means that in order to get job costing done effectively, someone has to log in every day, or once a week and manually look up each transaction, go back to QuickBooks, and break down the amount into the correct cost code, or chart of accounts category. Depending on how many transactions per day, it can be costly and time consuming.
The commitment comes on the back of the business owner. However, they have to ensure that the project manager, crew, and boots on the ground are properly recording each transaction at Home Depot, Lowes, or where ever you choose to buy materials. Otherwise, you will be paying your bookkeeper for an incomplete picture, which is a waste of time and money.
Vendor invoices/ bills for materials are easier because they come in as we described above. Through email, with an already itemized breakdown that is easy to put into the books and generate reports on.
So if job costing is something you need, make sure you are organized and structured in your business enough so that we at Papillon House Bookkeeping can implement the process effectively enough so that it does not cost you precious resources without the yield you deserve.
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How can a bookkeeper add value to your business & your life?
The old adage of “time or money” describes most business owners. Either you have an abundance of time and little revenue, or an abundance of revenue and little time.
However, the dream of every business owner is to have a healthy supply of both. Our bookkeeping services are designed to help you achieve the right balance of time and money. Our services put time back into your life for a reasonable cost, giving you both more time and more money.
It is also true that few business owners, whether they own a small business or large, got into their business in order to be an accountant. Instead, business owners have a passion to do what they love, and to make money doing it – bookkeeping and accounting is just an unfortunate side effect.
However, by hiring a bookkeeper you can get back to doing more of what you love, without losing the money you make to do it. Furthermore, with proper financial records and reports, proper forecasting, and a well maintained AR/AP you can focus on increasing your revenue, decreasing your costs, and growing your company how you want to.
Of course you love your business, but there should be more to life than just work. Whether its watching a sporting event and going on vacation, to spending time with family and kids, the hard truth of entrepreneurship is that you can’t do the things you love with the people you love, when you’re spending hours a week balancing your books and trying to run reports.
At Papillon Bookkeeping, we offer a way for you to gain back that valuable time that lets you get back to the things in life you’d rather be doing.
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