By Bradford Jones, CPA, CVA, CMA, CFF
What if there was a way to boost profitability for your construction business and eliminate the struggle to find and retain skilled employees to properly manage your accounting function?
The answer is finance and accounting outsourcing, or FAO, for construction companies.
Keep reading to see why your internal accounting processes might be wasting time and money and how easy it can be to digitize your accounting function and make it significantly more efficient.
Inefficiencies of Internal Accounting for Construction Companies
Real estate developers, construction company owners, general contractors, and subcontractors typically have hundreds of plates spinning at any given moment.
And non-core activities like sorting through resumes to patch an understaffed and overburdened accounting department are often pushed to the bottom of a busy to-do list.
But without a streamlined and efficient accounting function, the bottom line of your construction business can suffer:
- Less than ideal business outcomes. Bookkeepers using antiquated accounting reports don’t produce insights that contribute to effective business decisions.
- Antiquated processes. The daily or monthly accounting tasks that were once important are no longer relevant because your construction business has grown and evolved. But your accounting department is just operating the way they always have.
- Gaps in controls and data security. When employees have been with you a while, internal controls and attention to data security can fall by the wayside.
- Lag in digital transformation. Upgrading to new software that could drive efficiency for your business and generate more insights is out of the question because moving to digital would be too overwhelming for your current staff.
Outsourced Accounting Solutions for Construction Companies
Outsourced accounting can be a powerful solution for organizations in the construction industry..
By outsourcing your accounting and finance functions, your real estate development or construction business can accomplish so much more, including:
- Matching costs, and future costs in particular, with early development revenues
- Avoiding tax overpayment that can diminish cash flow
- Managing inconsistent cash flow
- Generating timely financial statements that accurately reflect work being performed
- Translating operational performance into meaningful and insightful financial reports
- Evaluating operational efficiency
- Establishing a competitive pricing strategy that generates a sufficient profit margin
- Efficiently processing change orders for timely pricing, approval, and billing
- Making accurate and data-driven financial projections
- Lookback planning and guidance
- Ensuring that overhead rate calculation captures potentially overlooked indirect costs
When your finance and accounting function is informed by the industry’s best practices, your management team can:
- Identify problems early and get ahead of them
- Be proactive about budget-to-actual variances
- Anticipate and explain monthly performance to private equity owners or investors
- Compare your company’s performance against industry standards
How to Find the Right FAO Provider for Your Construction Company
Operating a finance and accounting function inside your construction company can quickly become overwhelming — especially when budget and staff are limited.
Outsourced accounting helps to ensure that decision makers in your construction business have access to consistent and accurate financial information.
Plus, when you find a reputable outsource provider with construction accounting experience, you tap into specialized expertise typically unavailable within the constraints of small organizations and scarce resources.
But, here’s the thing: you’ve got to find the right outsourced accounting provider.
To properly vet an FAO provider, check that the provider has:
- Be sure the provider has experience working with businesses in the construction industry.
- A proven tech strategy. Ask about the software and tools they use to manage finance and accounting processes. The provider should be able to explain how they plan to integrate with your existing systems, if needed.
- The ability to scale with you. Can the provider respond to the changing needs of your company? Ask how the firm will accommodate your future growth.
- Data security and compliance protocols. Assess the provider’s data security protocols, adherence to regulatory requirements, and compliance certifications.
When you work with PBMares, you can expect us to check all the boxes above. You can also expect us to provide:
- A highly disciplined and structured process
- A team with specialized industry expertise
- A completely virtual, paperless, and non-intrusive experience
At PBMares, our outsourced accounting services make your life easier and your organization stronger. Our experienced finance and accounting professionals deeply understand the construction industry and the accounting hurdles you face.
Contact Brad Jones today to learn more about what you and your organization can accomplish when you outsource your accounting and finance functions.