On the Job: A Day in Construction Bookkeeping

The sun hasn't fully risen, and while most construction sites are still silent, the buzz of activity begins in the finance departments of contracting companies. From the first invoice processed to the final financial report of the day, construction bookkeepers stay in perpetual motion. If you've ever wondered what goes into a day of construction bookkeeping, here's an inside look.

1. Early Morning: Checking the Financial Pulse

The first order of business is to gauge the financial health of ongoing projects:

• Review Cash Flow: Understand how much money is coming in and going out to ensure smooth operations.

• Monitor Outstanding Invoices: Identify any overdue payments to keep the cash flow consistent.

2. Mid-Morning: Job Costing and Reconciliation

Every cent counts in construction. This is when bookkeepers:

• Allocate Expenses: Determine which project-specific costs have been incurred.

• Reconcile Accounts: Compare the company’s internal financial records against monthly bank and credit card statements.

3. Before Lunch: Managing Payroll and Subcontractor Payouts

With a myriad of skilled workers and subcontractors involved:

• Calculate Payroll: Ensure every worker is compensated for their hours.

• Handle Subcontractor Bills: For specialty contractors, like plumbers or electricians, ensure their invoices are processed.

4. Post-Lunch: Engaging with Project Managers

It's not all about numbers; communication is key.

• Update on Financial Status: Notify project managers about the financial status of their projects.

• Budget Adjustments: Discuss any changes in project scopes that might impact the budget.

5. Late Afternoon: Preparing Financial Reports

Transparency is crucial in construction finance.

• Profit and Loss Statements: Determine how profitable specific projects or the company as a whole has been during a particular period.

• Balance Sheets: Offer a snapshot of the company's financial position, detailing assets, liabilities, and owner's equity.

6. Wrapping Up: Planning for Tomorrow

Before calling it a day:

• Prioritize Invoices: Determine which vendor or subcontractor invoices will be settled the next day.

• Set Goals: Whether it's chasing up a certain number of overdue invoices or finalizing financial statements for a particular project, set the next day's objectives.

7. Types of Contracting Companies and Their Unique Needs

Different contracting companies have their nuances when it comes to bookkeeping:

• General Contractors: With the responsibility of overseeing a construction project from start to finish, the bookkeeping needs span from managing subcontractor payouts to handling client billings.

• Specialty Contractors: Whether it's a roofing or landscaping contractor, the financial focus here might be on bulk material orders or specific equipment rentals.

• Design-Build Firms: Balancing the creative and construction aspects means maintaining a clear distinction between design-related expenses and construction costs.

Closing Thoughts:

The world of construction bookkeeping is intricate and ever-evolving. While the tools and processes may vary, the goal remains the same: to ensure that every financial aspect of a project is tracked, managed, and optimized. And while the day might end for our bookkeeper, the impact of their meticulous work ensures that projects run smoothly, budgets are adhered to, and financial health is maintained.

If the challenges of construction bookkeeping ever seem overwhelming, remember, you're not alone. Ledger Management is here to guide and assist, ensuring that your financial foundation is as strong as the structures you build.