6 Pros and Cons of Outsourcing Construction Bookkeeping

Holding back retainage is standard on most construction jobs, especially long-term contracts. If it’s not reimbursed quickly enough though, it can cause a domino effect of cash flow problems. To properly record and track retainage, you’ll need to include an account for retainage receivables on your company’s Chart of Accounts.

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Developing an efficient strategy aimed at eliminating delays requires optimizing the budget and allocating the available finances wisely to maintain a constant money flow. In this guide, we will explore the essential role of construction bookkeeping and examine how it allows businesses to adjust their policies with regulations, increase revenues, and achieve sustainable growth. Our Raleigh accounting firm has provided construction bookkeeping services for decades and can offer financial guidance that will help your small business. Our CPAs have demonstrated their professional competence and commitment to upholding high accounting standards. By outsourcing your construction bookkeeping needs, you can focus on growing your construction business while having confidence in your financial management. Let’s explore the advantages that come along with small business bookkeeping services as it relates to https://www.merchantcircle.com/blogs/raheemhanan-deltona-fl/2024/12/How-Construction-Bookkeeping-Services-Can-Streamline-Your-Projects/2874359 your business.

How Profitjets Simplifies Construction Accounting

• Our CPAs have demonstrated their professional competence and commitment to upholding high accounting standards.
• Outsourced accounting firms use advanced accounting software to track expenses, revenues, and payroll, ensuring your records remain accurate and compliant.
• They specialize in project-based accounting, which enables ventures to estimate profits for every project and calculate the investments they need.
• Chris combines his experience in tech and construction to build products that actually help SMB contractors improve and streamline their business operations.

Because construction is project-based, you need a way to see how well individual projects are performing at a granular level, instead of trying to get a grip on your company’s financials from five miles above. This is where job costing comes in, allowing you to make sure each new construction job you take on is hitting all the marks. Consider the compatibility of the outsourcing partner’s bookkeeping systems with your existing software and processes.

Understanding Retainage

Consider their track record in serving construction businesses specifically, as industry-specific knowledge is crucial for accurate financial management. As onboarding in-staff specialists requires additional expenses and time, many construction firms order accounting services provided by third parties. We assist our clients with organizing their reports and implementing effective expense-tracking approaches. Outsourced accounting firms use advanced accounting software to track expenses, revenues, and payroll, ensuring your records remain accurate and compliant. The first step to building more accurate accounting processes is recognizing that construction accounting is different.

Furthermore, it aids in budgeting by providing a structured approach to estimating expenses and forecasting revenues, ensuring that resources are allocated efficiently and effectively. Additionally, accounting ensures compliance with tax regulations, helping organizations navigate complex tax laws, avoid penalties, and maintain accurate financial records. Profitjets provides tailored outsourced accounting for construction companies, addressing unique industry needs like project cost management and job costing.

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It’s hard to protect your margins on the job without being able to see how it’s performing in real-time. WIP reports make it easier to get an overview of each project’s budget, percent complete, actual costs to date, and more, so you can see if it’s overbilled or underbilled. Maintaining a healthy business also means learning how to correctly recognize and report your revenue.

• Outsourced bookkeeping services are a strategic choice that can help construction companies manage their finances, reduce costs, and focus on project success.
• Outsourcing this task to an experienced bookkeeper solves the issue and allows ventures to implement modern approaches while maintaining full accountability.
• Because construction is project-based, you need a way to see how well individual projects are performing at a granular level, instead of trying to get a grip on your company’s financials from five miles above.
• This is where job costing comes in, allowing you to make sure each new construction job you take on is hitting all the marks.
• As your construction business grows, outsourced accounting services can easily scale with you, adding new services or handling higher transaction volumes as needed.

There are four revenue recognition methods, but for the sake of this guide, How Construction Bookkeeping Services Can Streamline Your Projects we’re going to focus on the percentage of completion method (POC), which is what most contractors end up using. Reputable services assist businesses with mastering the intricacies of the laws regulating the industry. They specialize in project-based accounting, which enables ventures to estimate profits for every project and calculate the investments they need.

Accurate tracking of progress billing ensures that revenue recognition aligns with project timelines, preventing cash flow discrepancies. Retention accounting involves withholding a percentage of payment until the completion of a project. This is common in construction contracts to ensure that the contractor completes the work satisfactorily.