Accountants in the construction industry often approach me and ask for tips and tricks pertaining to working for this challenging industry.
TIP 1: Be sure that you are aware of the differences between types of construction companies and the greatly varying compliance and analysis needs that can exist among them.
Start by clarifying the type of contractor you plan to serve.
Do you plan to work for residential or commercial contractors?
Will you be serving general contractors or subcontractors and specialty tradesmen?
Have you considered that developers can be a standalone type of construction client with very distinct needs of their own?
The next question I am usually asked is which software works best for construction clients, yet that question can only be answered once the above questions have been resolved.
Not all software is created equal. There are so many apps and some are more suited to one or another of the contracting businesses. Whereas one app tracks things like square footage of roofing supplies or linear feet of piping for a subcontractor’s needs, a totally different app will help record the entire scope and range of ground-up home building stages that can range from demo and site work to final trim. Knowing what your client needs to track and report is crucial.
One of my preferred things about today’s cloud accounting influx is the fact that cloud app developers are able to update and upgrade their software on a very regular basis. Which brings me to the second tip.
TIP 2: Taking the time to develop a good relationship with app developers is one of the best ways to add value for your clients. Being able to say to a client, “I see exactly how a change to that aspect of the program could improve your workflow. Let me reach out to the app developer team and let them know how that would improve your experience,” is a huge benefit to our firm.
Not all the changes that we suggest can be made immediately, but many of the changes that our firm has suggested to our app partners have been implemented to help our clients improve their workflow and increase their ability to get the information they need.
Here is a list of the apps with which we have been able to develop partnerships and that we often recommend to our construction clients and fellow construction industry accounting firms:
Another question I am often asked is how to best serve the industry with advisory level services that go above and beyond mere compliance. This third tip is my favorite because the construction sector has some unique needs that a firm can tap into and serve in ways far beyond mere number crunching.
At our firm, we have set ourselves apart by offering a full suite of back office services to our commercial subcontractors that we call Construction Document Management. This means that on top of a full range of standard accounting services we offer more construction specific tasks such as:
- Preparing AIA style progress billings
- Dealing with monthly WIP reports
- Preparing 20-day preliminary lien notices
- Checking and dealing with lien waivers
- Ordering certificates of insurance
- Comparing bids and takeoffs to the incoming and outgoing contracts
These services help ensure that no owner or general contractor can withhold payment on any project.
Our team is now able to let small to medium sized construction subcontractors know that we are their back-office team. A back-office team with specialists in not only payables, payroll, invoicing, etc, but also with trusted experts in managing the contract documents that can be so overwhelming for them to learn, research, and understand.
So, there you have it. My top 3 tips:
Determine which sector of the construction industry your client is part of
Take time to develop a good relationship with app developers
Look at the frustrations your construction clients face on a daily basis and see if there is something your firm either already knows how to take off of their plate or can learn, hire, or otherwise find a good way to fulfill that need for them.
Tonya Schulte is a construction accounting specialist at Schulte and Schulte. providing the “Corporate Accounting Office” for small/medium commercial construction trades.
See inside July 2019
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