What is construction bookkeeping 101? Delving into what construction bookkeeping entails is important because it requires additional skills and qualifications then bookkeeping in other industries that don’t deal with the same types of project costs, finance management, or billing. If your bookkeeper has no experience with construction or doesn’t understand the difference, your company could run into any problems down the road. Here are the basics of Construction Bookkeeping 101.
Construction Bookkeeping 101 Unique Aspects
The practice of project management in construction jobs involves projections of income, hiring subcontractors, working with employees, securing supplies and materials, and managing sites, which make job costing a complicated proposition. If any of these issues are not accounted for properly, it’s tough to know your bottom line or be ready for future projects. Construction bookkeeping 101 is knowing construction bookkeeping is different because of three main aspects of a construction business:
- Projects – Job costs are tough to pin down without understanding every aspect of a complex job. All construction projects are made up of a complex web of many variables, relying on the complete coordination of various companies or workers to hire or use just for those specific jobs. The contractor has a lot to coordinate, and aspects of that coordination will change during the project when changes are called for or previous accommodations fall through. Therefore, special accounting must be used to track all costs.
- Job locations – Construction jobs don’t happen in a centralized location like your company factory, warehouse, or office. Instead, they occur at a specific site location which presents its own logistical and supply challenges. This also changes accounting techniques and often requires special costing flexibility and tracking skills.
- Ongoing contracts – Job contracts with the primary client involve a period to accomplish many steps of a given project. For example, the typical construction job requiring many moving parts is never a “one and done” proposition that begins and ends in an afternoon. It’s not a simple sale or service. Instead, it’s an involved process that includes many products and services done by many people in stages, requiring legal permits and following regulatory considerations. All this needs to be tracked and reported accurately and efficiently.
Construction Bookkeeping 101 means you know the basics of construction bookkeeping. Working Numbers goes beyond the basics. Working Numbers appreciates the special nature of constructing bookkeeping and aims to provide the highest level of service. Have a special project that needs more finances coming up? We can provide one-time or ongoing construction bookkeeping services for your construction company and contractor needs. Call us today for your free consultation.