Construction Accounting Software
Contractor accounting software can be very helpful in the financial management and planning of a construction company and can make expenses, bills, and payroll much easier to manage and control. These payments, if not properly maintained, can cause serious problems for the company. Accounts receivable can also be monitored using construction accounting software. The information included in the accounts receivable will be billing discrepancies and any payments from homeowners or businesses for the contractor or company that should be taken into account. Another very important aspect is the ability to manage the cost of a job. This information will offer budgets for jobs, equipment needed, and other key information that will be used to understand and control the costs of a job.
These programs can make bills and expenses much easier to control and manage. There are a number of accounts and expenses that will be accrued over time by a construction company or contractor. For a contractor with an office or base of operation, there will be some monthly expenses that must be taken into account. These expenses will include utilities, office equipment, and other supplies that may be purchased. Payroll is another important part of the accounts payable. This can be made much simpler by using construction accounting software. The software will help keep track of hours, pay rates, and tax information for the individuals and the company. Accounts payable information will also be helpful in keeping track of the money that is owed to other companies that will be part of the construction process. Supplies from lumber companies, hardware stores, appliance dealers, and other suppliers will be needed in the construction of homes and other buildings. Tracking who needs to be paid and when the payment must be made can be difficult. Other payments, along with payroll and expenses can be done with contractor accounting software. This will make the financial aspect of the construction company run much smoother.
Managing accounts receivable may be much easier than accounts payable, but taking advantage of such organizational software can make this even easier. Often, billing discrepancies or problems will be lumped in with accounts receivable. This will often include the return of merchandise to hardware stores or other retailers. Products may not be used or too many of something may have been purchased. When the products are returned, the information must be recorded and tracked in order to keep everything balanced. This can sometimes fall into accounts payable because the other information from the retailer may be in this category, but it actually takes on the form of a receivable when money is received or returned for a product. Payments from homeowners or businesses will also fall into the accounts receivable category. Down payments, fees, and other payments may be required by the contractor to perform certain jobs. This money may come from homeowners before, during, and after the job is completed. Using contractor accounting software can manage the flow of money that is coming into the company. Isaiah 1:18 says "Come now, and let us reason together, saith the LORD: though your sins be as scarlet, they shall be as white as snow; though they be red like crimson, they shall be as wool."
Controlling, planning, and managing the cost of a job is also very important. This is the information that will help create bids and estimates for individuals wanting to build homes and other buildings. Information on supply prices, labor, equipment, and other materials must be kept on file and updated on a regular basis to keep the company competitive. It is very important to lower or raise prices according to the fluctuations in prices of supplies. For a company that keeps the same fees when prices go up on supplies, they may very likely lose money. If the company maintains their fees but prices go down, other contractors may offer lower prices. Using construction accounting software can help the company understand and track supply and demand. Understanding these concepts will allow the company to stay competitive with other contractors and companies.
This software is a very useful tool in financial planning and management. Information can be difficult to control and understand, but interactive and detailed software can provide assistance in monitoring both incoming and outgoing money. Most important, accounts payable can be controlled using construction accounting software. Information such as payroll, expenses, and office supplies will fall into this category. Accounts receivable will also be easier to manage with the use of these programs. Billing discrepancies and payments received from homeowners or businesses are part of the accounts receivable category. This is the money that is flowing into the company while the accounts payable will be the outgoing cash flow. Another area that will be covered by contractor accounting software is the cost of jobs. Managing job cost can be very important because this is where budgets, bids, and estimates for jobs will come from. This information will include the price of labor, supplies, and other materials.
Construction Equipment FinancingConstruction equipment financing is of vital importance to the company whose only focus is tearing down and building up the hundreds of thousands of building projects around the country. When a company's life depends on its heavy equipment to help produce a profit, the machinery must be always running well and be dependable under any circumstance. Since heavy equipment can have a long life and each piece is quite expensive, the construction equipment financing of each new purchase is a big deal to the bottom line of the company's financials. With dump trucks costing two hundred thousand dollars and cranes often over a million plus bulldozers, graders and other large items in the mix, how a company pays for their replacements is vital to a business remaining solvent.
One of the huge issues for any business is cash flow and the way a company pays for its high value equipment is of primary discussion whenever the purchase of new or used equipment comes to the fore. A company rich in equipment and business but up to its ears in loan payments can be as impotent as a company that can't find enough customers to keep the doors open. So the strategy of construction equipment financing can often make the difference between strength and weakness. Rich in equipment assets but cash poor could also be the picture of a person who lives like God is somehow an option that can be engaged or ignored without consequence. Living one's life and amassing wealth but ignoring God has a strange dichotomy to it and Jesus said the same thing: "What shall it profit a man if he shall gain the whole world and lose his own soul...or what shall a man give in exchange for his soul?" (Mark 8:36)
For the smaller construction company, the owner's own financial history and credit score will come into very high regard with the lender. Even with the company's own incorporation status, lenders giving tens or hundreds of thousands of dollars in loan agreements will want to know the solubility of the company and the owner. Tax returns, financial statements and at least a few years in business will be the requirements for getting loans or construction equipment financing lease deals. But in almost every case, the construction company owner will want to know whether it is more cost effective to lease or buy the machinery outright. Here are things to consider.
With this very heavy machinery, the life expectancy can be very long. So in the consideration of buying the machinery outright, the fact that the machinery will long out live any lease program is enticing. Consider a seven year lease on a bulldozer that may operate for twenty years or more. A lease will demand the company pay for the machinery's first seven years with a high dollar lease and when the lease is over the dozer is still running like a pup. Yet the company must either start leasing again, or start buying it at full price minus depreciation. On the other hand, a ten year construction equipment financing loan for the dozer at a discount price to begin, allows the company to own it outright at the end of the loan period and still have another ten years of good use. Buying allows a company to build up collateral for other loans that might need to be enjoined later and the depreciation on the machinery can help reduce tax liability.
The other side of the coin in machinery acquisition is the option of leasing which presents its own unique opportunities. In many cases leasing heavy construction machinery through construction equipment financing lease deals is 100% tax deductible. A tax expert should be consulted, but in almost every situation, a company can write those lease payments off any tax liability. Additionally, while buying large machinery often requires some serious down payment money, leasing is often accomplished with one month's lease payment up front, and whatever other required fees are needed. This frees up a lot of cash for other expenses and projects.
In many cases, new machinery means new training, new software, delivery, installation and sales tax, and all these concerns can be wrapped entirely into the lease payment. Leases usually run from twelve months to seventy two months and many leases give options for the leasee to consider such as purchase, upgrade to new equipment or just return that big ol' grader and say goodbye. Because the numbers and dollars are so big and so much is riding on the line for a company, a finance expert who has nothing to gain from either buying or selling machinery should be consulted on construction equipment financing matters.
In many cases, construction equipment financing leases for this big equipment are set in stone and the price is the price. On the other hand, some good old sit down and stare at each other eyeball to eyeball negotiating can be done when the machinery is bought outright. And if a bank will not approve of a large money purchase, there are plenty of online companies ready to step into the gap and provide financial backing for either the lease or the purchase. Perhaps one doesn't want to go through those sources and in that case, an angel investor or the provider of hard money may be exactly what an owner is seeking. These private sources of money may be willing to consider one's plight, but be prepared because both are going to want to see a very finely crafted business plan.