611: The High Cost Of Not Keeping Up With Your Bookkeeping

This Podcast Is Episode 611, And It's About The High Cost Of Not Keeping Up With Your Bookkeeping

If you ask 100 business owners what they like least about running a business, bookkeeping will likely rank high. It's an annoying and frustrating chore that takes up much time and is easy to put off until tomorrow.

 

Avoiding your bookkeeping is dangerous, however. Not knowing your construction company's financial situation can result in missteps that could ultimately cost you your business.

 

When starting bookkeeping as a construction business owner is challenging, a good first step is to break the process down into manageable tasks.

 

Here are a few tips to help get you started:

1. Set up a simple system

Choose an accounting method and set up a basic system, whether a spreadsheet or accounting software tailored for construction businesses.

2. Gather your documents

Collect all necessary financial documents such as invoices, receipts, bank statements, and payroll records. Organizing these into folders can make the process less overwhelming.

3. Focus on one area at a time

Instead of tackling everything at once, concentrate on one aspect, like tracking expenses or invoicing, until you feel comfortable before moving to the next.

4. Schedule regular time for bookkeeping

Setting aside a specific time each week for bookkeeping tasks can help make it a routine and prevent it from piling up.

5. Seek help when needed

If you're feeling stuck, consider hiring a bookkeeper or accountant with experience in the construction industry. They can help you set up your system and teach the essentials, providing much-needed support in this challenging task.

Take small, consistent steps to gradually build your bookkeeping skills and confidence. By taking control of your bookkeeping, you're empowering yourself to make informed decisions about your business.

What happens then if you fail to do so? Here are three costly consequences of not keeping up with your bookkeeping:

1. You'll make poor decisions

You can only make informed decisions about your business when you have a complete picture of your current financial situation, including how much money is in your accounts, what your cash flow forecast predicts, and how much money you owe. Knowing when you can afford to spend money or need to hold back is much more challenging without that information.

Without proper bookkeeping, your decisions will be based on how you think things are going, which isn't always accurate. You may have just finished a good month and decide it's time to hire new employees, only to find out you don't have enough money in the bank to pay them. In the long run, waiting three months to hire employees might be more profitable, but you won't know that because your books aren't up-to-date.

Maintaining your books ensures that you have your company's full financial picture available so you can make smart decisions.

2. You'll make financial mistakes

Your employees, contractors, and lenders all rely on you to make your payments on time, every time. Payroll itself requires considerable attention to ensure your employees receive their benefits adequately.

Not keeping track of your financial books can result in expensive errors, including missed benefits, bills not being paid on time, or over- or under-payments. This could cost you extra in fees for late payments or rushed payments, which also affects your books.

In addition to all this, financial mistakes can lead to a lack of trust. You need a trusting relationship with your employees, contractors, and lenders, and payment errors can quickly erode that relationship.

3. You'll lose money

In addition to losing money in unnecessary late fees and payment charges, not keeping track of your books can result in lost money that your business desperately needs.

You won't know which of your clients or customers aren't paying you on time, which means you can't follow up with them or add interest charges for their late payments.

You could be paying too much in expenses, and if you don't reconcile your books, you'll have no idea that money is being wasted. You may have purchased a software program to enhance productivity in the early days of your business. You may have stopped using it but forgot to cancel it, so each month for the past few years, you've been paying for a service you don't use.

Those payments add up and affect your overall financial position.

Why outsource your construction bookkeeping to us - we might be the help you need

Flat Fee No Hourly Rate Surprises

You don't have to pay for payroll taxes, workers' compensation insurance, health and other benefits, or office expenses. We will work within your budget, so there are no surprises. Our services are usually cheaper than hiring a qualified employee, and you can choose an hourly or flat fee. Our contract has no time minimum time commitment clause. You have our service for as long as you need it. There is nothing to lose.

Quality & Experience

We pride ourselves on employing the highest quality bookkeeping professionals and ProAdvisors. Our employees have passed our extensive test, a thorough background check, and a personality screening process. Most of our employees have over 10,000 hours of bookkeeping experience. This experience level is difficult to find when seeking a part-time employee.

Professionalism

As non-employees, we can give helpful, honest advice on improving your procedures and overall efficiency. Most employees want to fill their time simply and are resistant to change. 

Final thoughts

Bookkeeping might be many entrepreneurs' least enjoyable task, but it's essential. If you find yourself putting off or dreading it, it's a good idea to look into hiring someone to do it for you. Construction Bookkeepers are trained and knowledgeable in the process, and they can save you valuable time and money in the long run.

Otherwise, be prepared to set aside time regularly to do your books yourself, and don't let yourself put the task off. It's too critical to the future of your business.

Want to get your books in order without adding more work to your plate? Contact us today.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or [email protected]