For those operating in the construction industry, whether just starting out or as an established small or medium-sized business, managing business accounts can often takes a back seat.
This is an environment where so much effort goes into securing work, maintaining professional contacts and actually getting the job done to your client’s (and your own) satisfaction. The impulse to handle your accounts on an ad-hoc basis might be a short-term time saver but in reality, it can limit your potential for growth.
This guide is for anyone working as a builder and looking for ways to nail best practice in managing business accounts without adding lots of hours to the working day.
Laying the foundations for accuracy with your business accounts
If you’ve decided the time to tidy up your accounts is now, it’s possible you’ve been scraping through to stay in step with legal requirements for maintaining a business.
Spreadsheets, paper invoices and digital statements could be held in various locations, so it’s worth taking a step back to assess exactly what you need from your accounting process.
Look at the records you’ve been keeping so far and think about:
- Estimating. What degree of detail do you go to in breaking down estimates?
- Tracking. How long do you keep records for? What data affects your estimates?
- Project management. What types of jobs do you commonly take on?
- Correspondence. Who needs to be updated on projects most often?
- Compliance. What reports do you need to run most commonly?
This might also be a good time to take a fresh look at the work you’re doing and identify areas where you perform especially well.
With a more streamlined system of accounting in place, you may be able to capitalise on your experience here and specialise to improve your operations.
Accounts for construction workers at every level
Having identified the information you need to access most, establish the context in which this information is accessed. Most construction firms track their business accounts both on an overall organisation level and by individual projects.
Overall accounts take into consideration the administrative costs of running the business, acquiring work, premises, training and any other expenditure that is not directly incurred as part of a project.
Tracking the finances of each individual project is known as construction accounting, or project accounting in a wider context.
By treating projects as standalone accounting jobs, you effectively ring-fence the finances allocated to a given project and allow them to make as much use of their budget as possible without needing constant oversight from the central accounts administrator.
Obviously, the income from individual jobs covers the larger-scale expenditures incurred at the organisation level, so by isolating the finances of each job, you can pinpoint the jobs that are bringing you the most return and focus future efforts on them.
Online accounting software for builders
This might seem like a lot to bear in mind, but it’s really not if you’ve got the right system in place. Online accounting software helps builders focus on the job at hand by providing a secure cloud-based means of running business accounts on the go.
The advantages of using cloud-based software lie in the way it allows you to fit accounting around the job and rest on three main pillars:
In this context, it means being able to perform the tasks you outlined earlier as quickly and easily as possible. You need to be able to access the same central database for all your accounts, whether for your organisation or an individual project, wherever you are.
Cloud software means you can run reports for clients, process payroll or review your finances without having to allocate time to sitting at the office computer or pouring over spreadsheets, safe in the knowledge that your data is secure.
This is a much sought-after software feature among those whose first love is not accounting. Ideally, you want little to no training time expended before you’re able to effectively use a software package. You also want one unified, familiar interface for any function you need to perform.
This means just that, being able to move with the times and still perform essential tasks without overhauling your entire accounts system. Legislation, both for the construction industry itself and for running a business, changes quickly and you need an accounts package that will update when the law does.
Time is money, so spend yours wisely
Keeping clearer, more defined records means you often find yourself with new insights into the way you’re spending your own time. Don’t sit on this knowledge, use it.
Take a look at the ways in which you’re getting out there to win new work. Is the greatest expenditure of effort actually translating to the most profitable contracts? If not, reallocate the time you spend networking based on the information at your fingertips.
Greater access to reporting in more detail also gives you more info on your staff. Who performs best on certain teams or on certain tasks? Use this information to flesh out your hiring procedure in future.
Help build careers and develop your people
On the topic of hiring, the construction industry is unique in that staff turnover is directly tied to the level of investment in your area. Skilled, reliable staff are generally in high demand in areas with high-value development, while quieter areas with steadier but smaller-scale work attract a different kind of applicant.
Combining the knowledge of your patch you’ve gained from your years in the business with the reporting power of a good software package will let you hire not just people to fill roles you need now.
You can plan ahead to create a more detailed person specification and develop the managers and foremen of the future without needing to hire all over again in a few years.
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