Olivia Roemer from Construction Technology Insider discusses keys to effective construction accounting. TAG provides outsourced accounting, bookkeeping, and CFO services to construction companies to improve efficiency. Some keys include keeping processes simple, ensuring cash flow is accurately tracked, timely billing and accounts payable, accurate job costing through proper payroll and change order tracking, and regular reconciliation and review of financial reports. Accurate accounting provides valuable information for decision making.

1. May 2, 2013
Presenter by: Olivia Roemer, CCIFP
Construction Technology Insider
Episode 2
Keys to Construction Accounting
http://www.teamtag.net/

2. TAG supports and strengthens your company’s accounting department
and management with outsourced bookkeeping, controller, and CFO
services.
Whether you are a CFO who could use a quality controller once a week,
a controller who needs bookkeeping assistance, or an office manager
looking for higher level finance and accounting oversight, TAG can fill the
need.
From sales to implementation, training to consulting, TAG’s team of
certified consultants work to improve your efficiency and reporting
capabilities with the best accounting software for the building industry.
TAG is an Authorized Reseller with a team of Certified Consultants for
Sage Timberline Office, Sage Master Builder and Contractor V.
Beyond the Numbers…
TAG provides valued financial and business resources &
counsel for companies and individuals on the move.

3. Keys to Construction Accounting
• KISS (Keep it Simple Silly!)
• Cash Is King
• Billings are Money
• Streamlined Accounts Payable Process
• Accurate Payroll Processing
• Change Order Procedure
• Reconcile and Review
• Accurate Job Costing

4. KISS (Keep it Simple Silly!):
• Do not overcomplicate the process.
• If you don’t understand how it’s working, you won’t
understand what it’s telling you.
• Keep this in mind and the cost to produce valid
information is much more manageable.
Cash is King:
• Accurately accounting for the money received and
spent.
• Reconcile bank account(s) statement(s) to the
accounting records on a monthly basis will help ensure
that all cash activity has been captured.

5. Billings are Money:
• Timely and accurate billing is the key step to creating
cash.
• Billing should be done on a regular basis and the
collection of those billings should be closely monitored.
Accurate Accounts Payable Process:
• Payables that are not processed timely and accurately
will result in:
• Billings being processed late
• Useless planning and budgeting
• Persistent unwanted surprises

6. Payroll Processing:
• For accurate job costing, payroll must be entered with Job
and Cost code detail.
• Determine how payroll time will be collected.
• Manually using a time card
• Electronically, using various mobile time collection
technology.
• Accurate payroll information can be used to create labor
production reports.
Change Order Procedure:
• Proper use of change orders are important to job costing.
• Keep you budgets up to date by entering changes to your
scope of work (change orders) will help you analyze where
you excel and/or where improvement is needed.

7. Reconcile and Review:
• Reconcile cash, investments and credit card liabilities
to a third party statement on a monthly basis.
• The activity in accounts receivable, accounts payable
and other significant balance sheet accounts should be
reviewed on a monthly basis for reasonableness.
•This will help ensure accurate job costs and
financial statements.

8. Keys to Job Costing:
The “keys to accounting” previously discussed also
applies here, however, there are a few other issues to
consider such as:
• Identify Key Cost Components
• Tracking Cost Components
• Performance Measurements
• Monitor Results
• Make Adjustments

9. Identify Key Cost Components:
• Labor & Labor Burden
• Equipment
•Materials
• Subcontractor
• Any other significant costs that relate to your contract
performance.
• These would typically be the same costs you
estimate in the bid process.

10. Tracking Cost Components:
• Determine a method to track the costs by job.
• Consideration should be given to the accounting
system in place and its ability to generate and/or track
cost flows.
•Include bid and revised estimates within the job cost
system.
Performance Measurements:
• Consideration should be given to include performance
criteria within the job cost system.
• Items such as pounds/yards, etc.
• Man hours
• Material per square foot, etc.

11. Monitor Results:
Review the results on the job to assist in evaluating
performance, as well as assist in estimating future bids
and making business decisions.
Make Adjustments:
As the business and/or jobs change, the job cost system
may need to be modified to meet the new changes.

12. Accounting & Job Costing-
Rule of Thumb Strategy:
1. Keep the accounting and job cost process simple.
2. The information produced should be relevant and
understandable.
3. Review and use the information to make individuals
accountable and good business decision.
4. Accounting and job costing are not the answers but
they can assist in getting them.

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