437: How A Bookkeeper's Incompetence Can Ruin Your Construction Business


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By Randal DeHart and Randal DeHart | Construction Accountant |PMP | QPA. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.
This Podcast Is Episode Number 437, And It's About How A Bookkeeper's Incompetence Can Ruin Your Construction Business Contractors, by nature, are tenacious, resilient, and have a tremendous amount of "Grit And Determination To Succeed," which means they are not easily disturbed or prone to react hastily or rashly at the first sign of trouble. This is just one of the many qualities I sincerely admire about these remarkable men and women. Like you, we have callouses on our hands, having owned and operated construction companies, and some of us have served an apprenticeship in one of the construction trades. In other words, when it comes to owning, managing, and making a substantial amount of money with construction and contractor service companies, we know what we are talking about. Incompetent bookkeepers can destroy your construction company and your finances. Unfortunately, until a contractor has gotten to know us, they tend to think of us as just another contractor's bookkeeping service. This means some contractors think we are crazy to suggest that any trusted employee, especially an in-house bookkeeper, would steal money from their company, so they ignore us until it is too late.

Furthermore, the Construction Bookkeeper Embezzlers come in every race, creed, color, gender, and age. At least, you can filter out the incompetent ones, but there is no definitive profile, no absolute way to know which contractor bookkeeper is an embezzler until they have been caught and convicted. Even then, if you do not perform extensive background checks, you may never know it until it is too late.

As a small business owner, you're likely concerned about every penny you spend. That's a good thing because you need to keep track of your income and expenses. However, it also means that you might be less likely to hire people to help your business. People like the competent bookkeepers, who are great investments for any small business.

So what exactly does a construction bookkeeper do? Construction Bookkeepers take care of the daily financial records for your business and make sure your books balance. They use bookkeeping software, such as QuickBooks Desktop For Contractors or Xero (like we do) to track receipts, reimbursements, reconcile accounts, and prepare specific financial reports. All the frustrating day-to-day financial stuff that you probably dislike they love.

A competent Construction Bookkeeper who is an expert in their field is an excellent investment for your small business for several reasons:

1. They save you time

Unless you're great at bookkeeping and enjoy it, you may find bookkeeping a headache. Chances are, you'll put it off until it's a massive chore to take on, then take ten times as long to do it. You'll find it takes you away from other business tasks such as training staff, networking, or marketing your construction business.

The time you spend trying to understand your financials could be better spent on tasks you're good at. A construction bookkeeper should be more efficient; they won't have as many errors and can save you a lot of stress in the long run.

Your time—and your sanity—are worth the cost of a competent bookkeeper.

2. They are experts in their field

Are you up to date on the various tax laws and fully aware of how they affect your contracting business? Bookkeepers are. They can advise you about any changes to the tax laws and what those mean for your business.

Construction Bookkeepers can also provide you with insight into your company's financial situation. If you're overspending in a particular area or need to reallocate funds, your bookkeeper will tell you. If there's something you don't understand about your financial situation, they will explain it to you, so your financial situation isn't a mystery.

3. They prevent errors

Because construction bookkeepers are experts in this field, they won't make the same mistakes you'll make. Those mistakes might seem small at first, but data entry errors, mixing up expenses, and other errors can add up, costing you money.

Final thoughts

What happens when the person in control of QuickBooks is unhappy with you? The same thing that happens when the person who cooks your food is unhappy with you.

We have seen bad bookkeepers ruin too many businesses, especially construction businesses. In most cases, it was Bookkeeper Incompetence or Bookkeeper Embezzlement. In other cases, it appears there may have been some deliberate identity theft; however, we cannot be sure.

All we know for sure is that we have witnessed business failures that have led to divorce, families destroyed, finances wiped out, and people living on the streets. Make sure you hire the right one for your construction company.

The services a competent bookkeeper provides can help you financially in the long run. They also prevent a lot of headaches and save you valuable time.

As a construction business owner, there's no way you can be an expert in all aspects of running your business. If you don't like bookkeeping or don't have the time or knowledge to do it well, a bookkeeper is a valuable resource and an excellent investment for you.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

442 episodes