The purpose of bookkeeping for any company is to help businesses have a clear picture of their current finances by recording and tracking their expenses and income throughout the year. Construction companies have some unique challenges that go beyond what most companies will have to track or record. There are specific differences in how construction companies operate and serve customers that make construction bookkeeping a bit trickier, though no less essential.
How Construction Bookkeeping is Different
A construction company has little in common with other types of businesses, such as a retail store, in the way it serves customers and makes its money. Retail stores typically have different products they sell with set pricing and procedures to get the product or service to a customer. For example, a small appliance repair shop has set prices for most jobs, with limited parts and specific avenues to acquire them. Here are some of the ways a construction company has more challenging bookkeeping demands than other types of industries:
- Custom projects – Not only are projects and charges organic based on individual custom projects, but a construction company may be working on multiple customized projects at a time.
- Costs- direct & indirect – Labor, materials, equipment are direct costs associated with particular projects. Business expenses derived from running the company outside of specific job costs include software, hardware, insurance, tolls and travel, repairs, and maintenance. Each of these costs is recorded differently.
- Contracts vary – Each contract has unique payment and collection requirements depending on the duration of the project as opposed to delivery or sales dates.
- Outside variables – Job costs are not static since they can be affected by weather and other unpredictable circumstances.
- Partial payments retained – Customers pay a percentage upfront and retain a percentage until they are satisfied with a job, so Paid Receivable dates may vary.
- Prevailing wages – Subcontractors are paid based on regulatory agencies, tax, union rates, and the expected per/hour rate rather than agreed-to compensation between management and workers.
Because of the many differences in how a construction company does business, construction bookkeeping requires specific and more complex recording and tracking of expenses and income payments. Working Numbers knows exactly how to accommodate the bookkeeping needs of construction companies best. In addition, we provide properly trained, professional bookkeepers with construction industry experience and training. Contact us today to see how we might help your construction company reach the next level of bookkeeping.