Your contracting company is excellent at what you do. Customers send referrals, your rates keep going up, and people come to you knowing they’ll get fantastic quality and service. Contractors are great at what they do, but bookkeeping isn’t a part of that mix. Having an excellent bookkeeping service isn’t just nice but essential to your profitability and keeping things running smoothly. Let’s cover a few reasons why an expert bookkeeper is someone you need right now.
Time is Money
A contractor’s time is best spent out on the job. You make great money working and lose money trying to dig around Quickbooks and filing paperwork. Losing a lot to save a little is never a good strategy. The first benefit of a great bookkeeper is giving you back time to make more money and have balance in life.
Receivables Aren’t Neglected
Business owners struggle with collecting payments. It’s time-consuming, requires strong organizational skills, and it’s just not fun. Cash flow is an essential part of a business with materials expenses on top of regular payroll. Consistent cash flow means the difference between being profitable or going out of business.
Contractors often look at their books and think, “Wow, I have all of this money yet to come in, and sales are going crazy.” Meanwhile, they’re going broke and don’t know it. An excellent bookkeeping service, like Daaxit, ensures that the business is cash flowing while you’re out doing what you do best.
All business owners celebrate during times of growth but might not know that they’re outgrowing the cash they need to fund it. Growth is costly, and many contractors will spend more per job while in growth mode simply by paying more for labor, materials, or necessary space to keep up with the growth. More equipment and vehicles are often needed immediately, requiring resources to cover the costs.
One problem for contractors pre-Great Recession was that they had funded explosive growth only to have the rug pulled out from under them overnight, and they had no cash reserves to carry them through a tremendous downturn. A great bookkeeper will help you keep growth managed and on a sustainable trajectory.
You Might Be Paying Too Much
A bookkeeper specializing in contractors knows the appropriate costs for materials, labor, and consumables. If your business is spending too much in any area, a bookkeeping partner by your side will advise you on better options, new suppliers, and ways to manage payroll.
Job Costing is Essential
Looking at your general financial statements is one thing; going through job by job is another entirely. Looking at the job costing can tell you exactly where costs might be increasing or if there is a trend in profitability right now. It’s more specific and immediate data that might not be noticed on the income statement right away, especially if much of your materials are purchased on 30-day net terms.
When a cost increase shows on your income statement, you must drill down to find the specifics. That information has already been analyzed and acted on with comprehensive job costing.
Tax Planning Happens Year-Round
One constant in life is that contractors don’t like paying taxes any more than anyone else. Year-round planning to take advantage of available write-offs and tax breaks will save you big during tax season. A great bookkeeper will ensure that write-off items, like mileage and equipment purchases, are adequately tracked and depreciation planned into the tax equation.
Tracking Period Over Period is Crucial
Great bookkeepers look at month over month, quarter over quarter, and year over year income statements and have an excellent general overview of where the business is headed in short order. What a business owner feels is happening and what is actually on paper can be two very different things. Having a pro that can show you the reality of your business and a true then versus now analysis is a picture that actionable decisions can be made from and help plan for the future.
Experimentation is Possible
Would a new compensation plan result in work completed more efficiently? Is the addition of a new marketing source going to result in an increase in profitable customers? Is there a business line that might be a great addition to the company? These are questions that your bookkeeper will be essential in helping answer. Highly profitable and growing contractors are constantly probing for new ideas. Knowing what these feelers are doing to the bottom line or company efficiency is something your bookkeeper will see right away.
Those are just a few benefits that an excellent bookkeeper can bring to your contracting business. Savings, improved efficiency, actionable data, and managing growth are all benefits that take your business to the next level. Your bookkeeper helps you make the right decisions, see the entire business picture and catch problems while they are still small. A great bookkeeper isn’t a luxury but a necessity.