Manage episode 303024495 series 1082451
As the Construction Contractor owner paying the bills, you are constantly concerned about "Making Money or Losing Money" jobs. It never seems like there is any money left over! Why does it seem like I am just watching the money fly by and zooming out of my checking account?
First things first:
- Have you invoiced everyone?
- Do you have an easy way for your clients to pay you?
- Change orders - get them signed and delivered where appropriate (ASAP).
Sloppy bookkeeping happens just a little at a time.
There are not any limits to the number of transactions that can be entered into QuickBooks improperly. Messy files build transaction by transaction or, more simply put, invoice by invoice, receipt by receipt all can be entered into QuickBooks improperly. No popup says "This Is WRONG" – Do It Over.
Reactive contractors practice the "Keep It Simple Method" for bookkeeping. Put all of the receipts in the drawer, out of sight and out of mind. The drawer is next to the computer with the QuickBooks for Contractors or other Bookkeeping Software on it.
Using the power of Wishful Thinking, the hope is that the transactions will "Magically Appear" into the Bookkeeping software without any additional assistance. Unfortunately, with all of the technology available, it still requires the help of a "Real Person" with skills to know where to put the transaction into the system.
Watch out for the customers who are not looking to pay you the value of your services.
These can be other contractors where you are working as a trade contractor or retail clients. Understand the rules about Notice To The Owner, and each state may have different laws.
RED FLAG anytime a homeowner or general contractor implies you will not get the job if you do not do this. On larger jobs, make it a habit to do Notice Of Intent To Lien. The notice does not say you will lien but protects your rights if you are not getting promptly paid. DO IT NOW – USE A SERVICE.
Run, don't walk. If you are being threatened, then chances are they do not intend to pay you.
Your supplier, whenever material is delivered, will automatically do a Notice Of Intent To Lien. This is a good thing because they are helping make sure you get paid for the material used on the job.
As a contraction accountant, I hear stories every day. Some are from contractors who gleefully brag about rejecting the estimates unless a discount is given (even when they know the price is reasonable). In my opinion, these are not good customers, just professional scammers. A good contractor knows his pricing and wants to give good value to his customers and pay a fair price to his contractors.
I have heard people bragging about not paying the contractor unless additional unpaid work is completed in social settings. It takes a lot for a customer (I mean scammer) to get on "The Bad List" of fast food places. Do you have clients, customers, or professional scammers?
Just a fence create good neighbors; using a lien service helps you get paid. The alternative is that you are racking up your credit card and spending lots of interest. It is an incentive to pay you. Those who never plan to scam; do not have a problem. In my opinion, it is the scammers who object the loudest.
It is hard enough being a Contractor; this is an easy way to get rid of those who never intend to pay you.
Reactive needs to engage in a service that factors your Accounts Receivables, and more desperate forms of financing are when you have a Quick, Fast Loan that requires daily or weekly repayments.
The least painful is to collect the money from your client. If being a little aggressive to enforce your lien rights is needed – Do It. – Do It Now, because your general contractors are protecting their lien rights.
In some states, if you are out of business, you can not collect your outstanding Accounts Receivables.
You can't spend or invest money you do not have. It is unreasonable to expect your suppliers to accept your credit card to pay your invoices, and you refuse to do the same. You can't afford the excuse; the rates are too high; I want you to refer back to the high cost of No Money or get a high-risk loan. In comparison using merchant services is cheap, and funding is usually in 1-2 days. Both clients and customers typically have a credit card tucked away for emergencies. Polite and tactful are not making your client "feel bad" if they need to split the payment between several cards.
Practice what we preach. We offer a Free Hour Consultation in which I try to provide value regardless of you purchasing future services from us. It is by exception that I take checks even from local clients.
Affectionately, I summarize my role for Outsourced Accounting Clients as Nurture, Nap, and Follow Up. In other words, I can say the same things other people around you say, but it comes out better. On the flip-side, we have been in construction and construction-related services a long time and know "BS" when we hear it! We are looking forward to helping you, and we expect our clients to follow directions so we can.
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 email@example.com