Every business is different, and contract work is no exception. What sets contracting apart, however, is its industry’s particular factors in managing cash flow. If you work in the construction industry and are looking for someone to manage your financial accounts, you’ll want to be sure to hire someone with extensive knowledge of contractor bookkeeping. Listed below are some of the unique circumstances which make construction bookkeeping so much different from other industries.
Factors that Set Contractor Bookkeeping Apart
Production is Scattered – Unlike other industries, the location of production varies, which can lead to extra costs for equipment and labor. These costs and the varying wage amounts will have to be tracked from each job site. Based on weather conditions and the seasons, construction is bound to change, which can lead to changes in costs that will need to be closely monitored.
Contract Work is Project-Driven – Construction is based around completed projects, which will need to be documented and finished in order to turn a profit. These projects are extremely time-consuming, taking even years to complete. During this period all funds being spent should be recorded to ensure that there was a profit being made.
Contract Length – Construction projects are known to span over years, making it critical that a contractor knows the costs and balances of the job completed. The varying payments that are made throughout the length of the project can easily be forgotten or mislabeled if not closely recorded. For a contractor to know that they have made a profit, their accounts payable and receivable should be accurate and in order.
AIA Invoicing – The American Institute of Architects is a group of over 100,000 members who manage agreements between construction firms, supplies, clients, and contractors. The AIA issues out two different invoices, G-702 and G-703, which are payment applications that ensure each subcontractor is receiving the money they are owed. A G-702 form charts the number of payments and work completed, while the G-703 form provides a more in-depth breakdown of these payments. These forms are typically expected to be filled out monthly, and their completion is critical to continue running a successful contracting business.
Job Costing – Since contracting jobs are comprised of so many workers, materials, and subcontractors, it’s important to manage all the costs to see which areas could use improvement. Job costing is a way of measuring all the expenses to plan for the next project. The cost of labor, materials, and transportation will all be taken into account to properly ensure that a project continues to accumulate a profit.
Hire a Professional Bookkeeper
When hiring an outsourced bookkeeper, it will do you well to hire someone who has experience in bookkeeping for contractors. They will stay on top of the rules and regulations, making bookkeeping a task you no longer have to worry about. Their close eye for detail and excellent organization skills will allow you to focus more on hands-on work, rather than endless paperwork and excel sheets. At All About Businesses, our accountants and bookkeepers are QuickBooks certified, allowing you to access your records whenever you need them. Outsourced bookkeeping is designed to make your life easier. Take a load off your shoulders and hire a bookkeeper who understands the ins and outs of your industry.