No bookkeeping system can ever perfectly fit every small business, and they all require a system that takes its unique variables into consideration. This rule is the same for construction companies and the system of bookkeeping for construction companies also needs to be tailored to its particular requirements and consider all the variables at play in every job. An understanding of these unique aspects provides the knowledge to successfully navigate the financial landscape of your firm.
Why bookkeeping for construction companies is different
The construction industry is based around individual projects, no two of which are ever the same. A project-based industry such as this is both product and service-based and incorporates sourcing materials, engineering, consulting, labor and more. This means that business expenses have to be tracked in both categories in order for a reasonable profit margin to be cleared.
Another aspect of bookkeeping for construction companies is taking into account jobs that come in quick succession or dry periods that take place between projects. The length of time that construction projects take also makes payment scheduling and collection unique to this industry.
Contracts can also vary in length between jobs, which means the construction company will not be bringing money in every month. The bookkeeping system thus has to be flexible while also organized enough to keep track of cash flow when required.
It is also crucial to stay on top of your overhead expenses. Pricing can vary wildly between different projects in the same categories because of market fluctuations, so carefully examine each cost by checking current market prices when trying to win the bid.
