Bookkeeping workflow for construction companies

Bookkeeping workflow for construction companies



 The construction industry may be seen as challenging, but it can be a very rewarding industry. When a construction company is run well and its processes are streamlined, it will run more efficiently, setting itself up for success.

With each job being unique, a construction company’s operating costs and revenues may vary significantly from one job to another. This also means that the cash flow that a construction company realizes can vary from week to week, month to month, and so on.

In addition to this, where one job may involve you going in and getting the work done right away and with minimal employees or sub-contractors, another project may involve a multitude of sub-contractors over an extended period of time.

There are many variables you have to pay attention to, and if you aren’t focusing on your workflow in construction, your company may not survive.



Workflow is the organized, and repeatable business activities that create a process. Simply put, it is the sequence of practices that are systematically performed, from the beginning right through to completion.

In construction, your workflow would involve not only the bidding, planning and scheduling, but the execution of tasks on the jobsite, and closing out of the project. This workflow would also happen in this order, with the preceding tasks needing to be completed before moving on.

It is the execution and possibly the automation of your business processes, where different tasks are completed according to a set of rules. Whether it be on a project, or when discussing your bookkeeping, these processes are best set up in the beginning, and followed.

This means that when these steps are then followed by someone else, they can perform the same activity in the same way, repeatedly. It simplifies your processes. When starting out setting up your workflow, you first need to outline your processes, step-by-step. This will allow you to be able to map your workflow, see where there are inefficiencies, and where you can improve.

If you’ve entered into the construction business, you likely know what your strengths are. Determining your workflow when it comes to bookkeeping though, may not be one of those strengths. This may be a task that you ask your bookkeeper to provide input on. This is because workflow management is critical when it comes to your construction business’s bookkeeping.

The processes as well as the specific tasks that are set up, are necessary and crucial when it comes to your bookkeeping. If these processes are not set up, or they aren’t followed, you may find yourself being flagged by the Canada Revenue Agency. This may even result in your company being audited. Another negative result of not following the workflow set out, is that you may end up owing more to the CRA than you had anticipated.

As with all processes, this workflow is best established early on. Proper workflow in your bookkeeping not only reduces inefficiencies, it streamlines processes and improves the quality of the work being completed.

Again, you can start with a flowchart in order to see what your workflow is. It may be something simple like making sure that you have all of your receipts and other important backup from your transactions.

Not only do you want all of your receipts, you want them all entered correctly into your accounting software. This is important so that you not only know where your money is going, but also so that you have proof of purchases when it comes time to taxes and potential write-offs.

Workflow in accounting also includes identifying transactions, posting transactions, recording in the ledger, recording in the journal, as well as preparing financial statements. Of course, it does need to be done in this order.

As we have mentioned previously, when your receipts and invoices are entered correctly and in a timely fashion, you are provided with a snapshot of your business that is in ‘real-time’. You will always know where your business is at.

As we noted above, these processes, or workflow, is crucial in the construction industry because there are many variables at play. As a business owner, you want to constantly be aware of where your construction company is at, as far as payables and receivables, as well as your cash flow.

When your business standardizes workflows and processes, you are reducing risk. Your workflow will ensure that all information is communicated, and everyone will know what is expected.

If your business has someone completing your bookwork internally and they take a vacation, these workflow processes will allow someone else to pick up and carry on, following the same processes. Your bookkeeping firm will also know what is happening because they follow this same workflow as well.

If you have your bookkeeping work completed externally, not only will you have a professional following this workflow, but they will be keeping you informed so that you will always know where you are at.

You bookkeeper can also assist you in determining which software applications will work the best for your construction business. There is an ever-increasing number of software programs available, as well as apps and tools that are specifically designed for construction. Choosing the right one may seem like a challenging task, and they can help you determine which will work best for you.

Where possible, allow automation to take place. This not only assists with the streamlining process, but it will also help to reduce the ‘human error’. You will see the improvement in your workflow by eliminating time spent on manual entries. This will allow you as a business owner to be confident in your processes and allow your bookkeeper to work more efficiently.

With cloud technology becoming more common, it allows for easy access at any time, and from anywhere that has the internet. When you look at the different software available, you want to ensure that what you choose is something that you and your bookkeeper can both use and communicate through. You also want to ensure that it will scale as your construction company does.

Software programs have been designed to improve your workflow, and they too are constantly improving.

One of these programs that can improve your workflow is QuickBooks. Not only does this program help you with reconciling your bank statements, but it can also be set up to deal with recurring transactions and reminders. It can also allow your employees to enter their hours through their smart device and be ready to go when it comes to payroll.

These are only a few of its features and it is only one program that is on the market. Some programs available can get to know your business, and your processes. For example, they can match invoices with their paid transactions, and even automate your bank reconciliations.

There are many that can let you take images of your receipts and match transactions to their respective invoices. They can also allow you to track your bills, helping you to avoid late fees and to take advantage of possible vendor discounts.

There are also programs that can improve your job costing. They can show your tangible materials as well as subcontracted services for specific jobs. By tracking the expense items by individual projects, you can then easily allocate these costs for reimbursement. This can also be set up in the beginning, so that it is done on all of your jobs.

As a business owner, you need to remember that the costs that you need to allocate aren’t simply your materials and subcontractors. You need to allocate the appropriate amount of overhead, any payroll, as well as your time too. This can also become part of your bookkeeping workflow that is set up, so that it is not forgotten.

Having this accurate data when it comes to your bookkeeping is critical. When your employees or subtrades are operating off of the same system on their smartphone or tablet, you are getting all of the necessary details when they are happening. Whether it involves purchases, customer approval, or kilometers driven, you will know as it happens.

By following these processes and using the tools available, not only are you aware of what your employees are doing and spending, you are also aware of the money that is coming in, in real time. This allows you to always be on top of your cash flow.

By following these steps, you will see your construction company’s workflow improve, helping you to build and scale your business.

Need help from an expert?

When setting up your workflow and software, there are a lot of things to remember. Let one of our experts at Valley Business Centre help. For over 30 years, Valley Business Centre has been providing comprehensive bookkeeping, payroll and tax services to our clients in Whistler, Squamish, the Sea to Sky Corridor and metro Vancouver B.C. areas. Valley Business Centre provides reliable and effective services to all clients.

Disclaimer

This article is written for informational purposes only. It is current at the date of posting and changes to laws and regulation may result in the information becoming outdated. It is not intended to provide legal, tax, or financial advice. It is recommended that readers get advice from a tax professional before making any final decisions.

Visited 376 Times, 1 Visit today
About admin information

Leave a Comment