As a trade contractor, you handle specialized aspects of construction for other companies such as framing, drywall, electrical, plumbing, HVAC, and landscaping. You also may perform sales and service activities for individual non-builder clients such as landscaping, HVAC, flooring, and audio/video systems.
If you install specialty products, you might have showrooms, displays, or retail operations, and could be carrying significant inventories.
Because of the nature of your services and the products you purchase, use, and often display, you are constantly at risk for time and cost over-runs and thin gross profit margins.
To balance those hazards, you need accurate week-to-week job-cost and product information so you can:
- Create accurate estimates and profitable pricing decisions.
- Track each job’s progress, monitor results, and make informed financial decisions.
- Keep an eye on product changes that impact your profit margin.
Additionally, you may need to develop a system that can help you:
- Enter incoming service calls/service orders.
- Record service calls and inventory used.
- Monitor inventory levels and use taxes due.
- Record retail sales and sales taxes due.
- Maintain control of purchasing activities.
The most important benefit of accurate job-cost and overall company financial and profitability information is the ability to shape your own financial future. How?
When you are intimately familiar with your job-cost and company’s financial numbers, you’ll be able to create more accurate estimates and make smarter buying and pricing decisions. That’s the real way to make a permanent and lasting change in your bottom line!
At a minimum, you need your accounting system to:
- Assign materials, trade contractor, and other production costs to jobs.
- Assign payroll and payroll tax cost for direct labor employees to individual jobs.
- Track Estimate vs. Actual results (by job stage) for nearly all of their jobs.
- Track (and collect on) Change Orders.
- Perform a variety of basic accounting functions within an integrated accounting system.
- Create a variety of valuable financial reports.
You may need more advanced features such as:
- Sales Orders (Work Orders).
- Inventory Tracking.
- Purchase Orders.
- Payroll preparation and related tax filings.
- Fixed assets tracking.
- Using QuickBooks to assign fully burdened labor cost to jobs.
- Calculating and making Work in Process entries for partially completed jobs.
Additionally, you want a system that:
- Can be customized to match the specific way you do business.
- Can be managed in-house – often by clerical–level employees.
- Is reasonably priced, with low or no maintenance fees.
Fortunately, QuickBooks (or Intuit Enterprise Solutions) is an ideal match for most trade contractor companies IF lists are properly structured and IF bookkeeping staff is trained in various aspects of construction and trade contractor accounting and reporting.
From: Betty Jones of Ann Arbor Cabinet Company
After consulting with Diane Gilson and Info Plus Accounting,
Betty Jones of Ann Arbor Cabinet Company
has a clear picture of where her money is spent
and how to effectively price jobs to realize a profit…
We offer one-to-one support and consulting services, as well as industry-specific QuickBooks online training seminars, to clients throughout the U.S.