I have been involved with Construction and Construction Accounting for over thirty years. All of the examples of Good and Cheap Bookkeepers in this article are from personal observations and discussions with bookkeepers in contractor’s offices, exit interviews conducted when bookkeepers are leaving a company and from classes and seminars.
Construction bookkeeping is difficult and complex because it is deceptively simple; 85% boring, 15% sheer terror.
There is a myth perpetuated at every “Contractor Round Table” (The round table at the local bar with a pitcher of beer and several contractors) about how bookkeeping is overhead and every dollar spent on overhead is a dollar taken from the bottom line. The sad reality is that at the auction every contractor learns the value of construction accounting.
Financial Statements for loans, lines of credit, investors and tax returns for government agencies are all examples of reports generated for outsiders and are of limited use to contractors.
Cash, Accounts Receivable, Accounts Payable, Balance Sheet, Profit And Loss, Job Profitability Reports…which jobs made and lost money are reports contractors need to operate and grow their business.
Nine Steps To Construction Accounting
Step #1 Sort Paper Into Piles For Data Entry
Step #2 Simple Data Entry
Step #3 Full Charge Bookkeeping
Step #4 Reconcile Bank And Vendor Statements
Step #5 Complex Accounting Transactions
Step #6 Local, State and Federal Tax Reporting
Step #7 Reviews Accounts And Key Performance Indicators (KPI)
Step #8 Generate External And Internal Management Reports
Step #9 Contractor Reviews KPI’s, Reports And Makes Decisions
Each step in construction accounting requires more skill than the ones below it which means you can expect to pay more because they bring more value and are in higher demand.
You can get someone with lower pay and lower skills to do it all and you will pay for their education with fines, penalties, lower profits, and lost business. Cheap tools are not good and good tools are not cheap; it is the same with construction bookkeeping.
Construction Bookkeepers Good Vs. Low-Cost
Most low-cost construction bookkeepers drifted into their positions without realizing the ramifications of not having the foundational skillsets required. Perhaps it was an entry level position.
Being self-taught meant they acquired a collection of bad habits and paradigms. In time they sank into a quagmire of quiet desperation to become low-cost construction bookkeepers waking up every morning hating life.
They dare not attend classes, seminars, lectures or seek continuing education because the lack the proper foundation in the principles of accounting let alone the complexities of construction accounting because it leaves them confused and in a haze. So over time they devolve deeper into becoming even lower-cost construction bookkeepers bouncing from one job to the next and in some cases opening their own firms. And that can be a tragedy for them and their customers.
When contractors treat construction bookkeeping as a commodity they search for the lowest of the low-price construction bookkeeper and neither party understands the true cost of not hiring professionals until it is too late. In a lot of cases the low-cost construction bookkeeper is not paid because the contractor went bankrupt before paying them along with a long list of other suppliers. The real heartbreak occurs at the auction or bankruptcy court hearing where every contractor learns the true cost of low-cost construction accounting and not understanding or paying attention to their financial and job costing reports.
A fortunate few of us make a conscious decision to pursue construction bookkeeping as a profession and we do it with a passion. We acquire a proper foundation in the principles of accounting and then we continually add to our skill sets the tools to master the complexities of construction accounting. We continue attending classes, seminars, lectures and seek education and knowledge. We are passionate about their profession and live our vision of being a part of a team that works together to build and maintain civilization for future generations by supporting our clients so they can become the best at what they do.
Good Construction Bookkeepers
- Arrive on time and leave on time
- Care about you, your company, staff and suppliers
- Cheerful, thinking, responsible adults
- Continually learning because they love the profession
- Embrace processes and procedures
- Take a lunch break to recharge their minds and bodies
- Take reasonable breaks during the day to clear their mind
- Team players working together with everyone
- Take responsibility for their mistakes and get help
To Find And Keep Good Construction Bookkeepers:
- Invest money and optimize office productivity
- Pay a living wage with benefits
- Air conditioning in the summer and heat in the winter
- Find ways to innovate and improve your systems
- Pay for training to update their skills
- Good lighting in their office and the building in general
- Kitchenette with beverages, snacks and a microwave
- Bottled water dispenser with hot and cold water
- Knowledgeable senior staff and pay for resource libraries
- Lots of desk space to spread out paper and assorted files
- Embrace The 7 Habits of Highly Effective People
- Private office with a door; they need to think
- Pay for 24-7 U.S. based phone support
- Affirm their value to your business and your clients
- Show appreciation and respect for them as a person
- Provide current computer hardware and software
- Two large flat screen monitors with DVI and high resolution
- Embrace Deming’s 14 points of quality
- When errors occur fix the system, not the person
Low-Cost Construction Bookkeepers:
- Arrive late and leave early to make up for it
- Time driven, not results driven
- Avoid learning because nobody checks the books
- Disappears when tax return is prepared; books are a mess
- Softly degrade and disrespect you as a person
- Do not care about you, your company or anyone else
- Gets even with you for every injustice against society
- If insulted react like cooks; use your imagination
- Keeps you busy to divert attention from the books
- Lets you think you control the accounting until it is too late
- Makes you think they're looking out your company, LOL!
- Expands work to fill whatever time you will allow
- Negotiates for benefits and eliminate accountability
- Networks with vendors, and competitors for a better job
- Spends time texting, chatting, e-mailing and web-surfing
- Take lots of long breaks to grumble and complain
- Train you to leave them alone by getting upset or angry
- Works to reduce profits so you make less money
- When the doors close they declare you were incompetent
- Are chaotic, neurotic, psychotic, selfish, disorganized
- Works through lunch to leave early
Most Interesting Parting Comment From A Low-Cost Bookkeeper
“Chaos, Panic And Disorder...My Work Here Is Done!”
To Find A Low-Cost Bookkeeper
- #1 spend little money and minimize office productivity
- Make sure they know they can be replaced anytime
- Cramped space for them to work in and a broken chair
- Substandard wage without benefits and no hope of a raise
- Old computer with one monitor and a slow printer
- Bad lighting everywhere; especially the restroom
- Answer the phone and run errands in their personal vehicle
- Let the office be hot in the summer and cold in the winter
- No continuing education in accounting or QuickBooks
- Nobody to ask for help with complex accounting issues
- Public noisy environment with lots of interruptions
- Accuse them of trying to run you out of business
- Constantly ask for reports you need to run the company
- The owner can if they have nothing better to do
- Spouse, roommate or anyone else who works cheap
- Search the web for a low-cost construction bookkeeper
If you are going to own a construction business you owe it to yourself and your family to get to the point where you are earning a minimum of $250,000 annually.
Good Bookkeeping can go a long way to help you to get there and if you have a Good Bookkeeper treat them like the precious asset they are; however, if you have a Cheap Bookkeeper contact us