When a contractor has decided it’s time to make the transition from standard accounting methods and tools to construction-specific accounting methods and tools, it’s best to start by reviewing the fundamentals of construction accounting.
Job costing excellence is at the core of high performing construction companies and measures the success throughout the job while providing insight into its future profitability.
Work-in-Progress is a key function to job costing that allows contractors to proactively manage jobs, their businesses, and also provides the essential details often required by banks, surety agents, and more.
Even with a strong backlog, not properly managing cash flow can be problematic for a contractor. Slow invoicing, unexpected expenses, and late payments from customers can cause serious cash flow issues.
There are several variables regarding construction labor making payroll more complex than most industries. Contractors that are disciplined and documented in how they approach payroll are less likely to encounter legal issues, penalties, and disruption to their business.
Change orders are an inevitable part of doing business as a contractor and can often mean more revenue. However, when mismanaged, change orders can be time-consuming and disruptive to the relationship between the contractor and their customer.