Diversify your customers and projects
If all of your customers are in the same industry, you risk losing it all if the industry stumbles.
Develop your specialty or niche, but maintain a percentage of projects outside your core specialty.
This one’s for you, construction accounting professionals!
From audits to interest rates, succession planning to cash-flow management to creating a recurring revenue stream - the experts have weighed in! Check out this central destination for financial best practices and forward-looking suggestions to super-charge your role as a growth driver of your organization.
Get out from behind the numbers and in front of the business.
How construction firms can build an accounting center of excellence to guide big decisions during tough times.
For most construction companies, the accounting department is seen simply as a box the company has to check. These folks balance the books and make sure the bills get paid, but they’re rarely leveraged to their full potential.
The construction industry is rife with risks, and accounting pros who know how to mitigate them and steer their companies toward significant growth.
What does it take for construction accounting professionals to elevate their voices in leadership -- and take on greater leadership roles themselves? In this ebook (part 1 of a three-part series) we take a closer look at how the finance department can become leaders at their companies.
While job cost reports are important, they don't always tell the full story. They are a snapshot of actual spending to date on any given project. But project managers need more context.
Today, we're talking about overhead and overhead allocations. Before we dive into that really exciting conversation, let's do a quick review of the income statement so that when we talk about overhead, we understand how it's affecting this income statement.
People don’t start out in construction knowing everything about construction accounting, even if they are “good with numbers” or have a background related to general accounting.
4 Ways Construction Accountants Can Mitigate Risks with Diversifying the Business
Today, we're talking about overhead and overhead allocations. Before we dive into that really exciting conversation, let's do a quick review of the income statement so that when we talk about overhead, we understand how it's affecting this income statement.
One of the accounting department’s greatest assets is its ability to assess risk and avoid it. Construction accounting personnel are generally risk-averse despite working alongside the adventurers who push construction projects forward.
If your subs bail, you fail. Here are a few ways construction accountancy can mitigate risk by diversifying the business:
If all of your customers are in the same industry, you risk losing it all if the industry stumbles.
Develop your specialty or niche, but maintain a percentage of projects outside your core specialty.
Get in lockstep with your company’s procurement process: How are they sourcing materials and subcontractors? Are they reputable?
Learn themes and nuances: e.g., procurement might not notice repeated reliance on a single sub, putting you at risk if the sub fails. Flag the lack of diversity.
Most contractors have more cash on hand in an uncertain bear market—which creates an investment opportunity.
Consider short-term investments, such as a treasury bill ladder, to add an extra 5-6% to your balance.
If you land a big project in an area that doesn’t have enough local talent, bringing in new workers will strain the AP and HR teams.
Local culture will impact productivity: the length of the workday, response time, resource availability. Consider local factors in advance for cost control.
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We’re not only able to win more jobs, but our jobs are a lot more profitable.
— Aaron Thomas, Accountant, Pieper-Houston Electric L.P.
