Your guide to construction finance and accounting news

3 common errors in construction jobs schedule

Those familiar with construction accounting understand the importance of a jobs schedule which encapsulates what makes construction accounting different from all other types of accounting. It is the place where revenue is calculated over time (percentage of completion method). Don’t miss: Lease accounting for contractors As an auditor I get to see job schedules from …

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Lease accounting for contractors

The wait is over. While there was a sliver of hope that private companies would not have to implement the new leasing standard, the day of reckoning has arrived.  On January 1, 2022, Accounting Standards Codification (ASC) 842, Leases became effective for privately held companies with December 31 year ends. This could have a significant …

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Better fade and gain tools to monitor construction contracts

One of the important trends for contractors of all type is to monitor construction contracts fade or gain. This is an analysis, by contract, of evaluating your original estimated gross profit against your current or final estimated gross profit. Jobs that improve their margins from the original estimate are considered contract gains, and conversely jobs …

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Key financial indicators for construction – Receivables to payables ratio

The receivables to payables ratio is simple and can be an effective tool to identify problems with billings and collectability issues. The ratio is calculated by dividing the receivables balance by the payables balance. Don’t miss: Working capital is a key financial indicator for construction companies The ratio is unique to each company and is …

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Working capital is a key financial indicator for construction companies

Does your construction company have enough resources to perform the work in current backlog? Working capital is a key financial indicator that can help answer this question. Don’t miss: Key financial indicators for construction The basic equation for working capital is: Current Assets – Current Liabilities = Working Capital. Creditors and bonding companies will typically …

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Key financial indicators for construction

If you are in the construction industry, as 1st Lieutenant Aldo Raine from the movie Inglourious Basterds says, “…cousin, business is a-booming.” Although everyone was affected by the pandemic in different ways, most contractors are continuing to have high revenues and backlogs with no end in sight (let us hope we do not get blindsided …

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Vaccine for economy – infrastructure investment?

As we wait our turn in line for the COVID-19 vaccine, our economy stands right beside us. With the risk of sounding bias towards the construction industry, I believe that giving our nation a “remodel” will help our economy bounce back from the pandemic. Don’t miss: Managing construction company overhead While certain sectors of our …

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Managing construction company overhead (general and administrative expenses)

There are generally three cost categories in construction: direct costs, indirect costs and general and administrative expenses (G&A). The word overhead is sometimes used interchangeably to describe indirect costs and G&A expenses. However, indirect costs should be thought of as field overhead while G&A expenses should be thought of as company overhead. G&A expenses are …

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A basic understanding of the Three Market Cycles for Construction Companies

The COVID-19 pandemic has thrown a curveball that caused a unique environment in every industry. To most construction companies the pandemic had no significant effect on volume, however, most contractors are worried about what the future holds and believe that curveball is still making its way to the plate. While there are theories of how …

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Contractors who build a culture of excellence

Construction companies who value employees as their most important asset are set to be successful during good and bad economic times. It is no secret that there is a significant labor shortage problem in the construction industry that is influencing project performance and profits. While construction workers seem to be the main beneficiaries of being …

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