In an article entitled “How did Contractors Get Rich, I have six systems that transform the destiny of your building. In this article we will restrict ourselves to financial control.
As reminder, the last time they are six systems:
1. Marketing
2. Sales
3. Staffing
4. Planning
5. Tracking
6. Financial Control
Before going into details, take a moment to discuss the role of financial control play in your organization.
At the beginning of the end, which is a company to create more wealth than you as an employee of a person. Since few things in life are more risky than ownership of a company, keeps a watchful eye on financial markets to stop and take care of all those pesky little accounting detail is of paramount importance.
In other words, carry out financial checks a defensive role.
Sales and operations are your sins. It shows. They deserve this money. Without them, have no money.
Financial controls to ensure that you keep the money you earn. You think you can save a lot of trouble.
When you hear the financial and accounting, they will try to convince them that the secret to success lies in controlling the financial business. In other words, setting financial goals and monitor their performance closely. You are seriously wrong. They have the cart before the horse.
The fact of the matter is, if we can sell well, safe well, and organize your team, you’re almost sure to win money. At this point, the main advantage of financial control do you have difficulty with the Treasury and the prevention of someone stealing your money.
You need to control systems for:
ACCOUNTING
Accounting is defined as the practice or profession of recording the accounts and operations of a company. Accounting involves the payment of invoices and revenue tracking. Accounting leads the six following functions:
Payroll Processing
Payroll is the main reason you hire an outsider May be better to manage your accounts. Payroll is complicated and difficult.
There must be someone who knows how to do what they do. Otherwise, you risk getting into trouble with tax authorities and employees.
REVIEW staff are well paid
You need a procedure to verify that your employees have been properly recorded their time are paid the salary itself, and they will be paid on time. If you are a non-union shop, which sometimes works well on wage rates are employed, it is a much bigger challenge and involves additional administrative costs certified (
Payroll).
Make federal tax payments and state
The timing of tax payments depends on the frequency of your payroll and the size of your company. Their reward system covers the amount of money that is deducted from the paycheck of each employee and have your payroll taxes extra.
Weekly, monthly or quarterly, you are obliged to state and federal level to make deposits. On failure, it leads to terrible punishment. You need a system to ensure that funds are properly secured and) duly filed (usually via your bank.
Pay your bills on time
My former accountant of the company was a master at hiding money, so it was due to our taxes quarterly, she had the money to pay them. You know, pay our bills on time is important for our owners. They hated late fees.
Few managers can afford to pay the late fees associated with suppliers. The industry is simply not enough profit to offset the interest of 1-1/2% per month, as suppliers to calculate.
Sending Out 1099 and W-2
At the end of January, ask your accountant must be properly completed and submitted your W-2 employees and 1099 subcontractors. I’m not sure what are the penalties for the late post, but you are required by the IRS to send it to the end of
January.
COLLECTION OF PERSONAL INFORMATION
This may sound like a cliché, but many, it is not. You are responsible to ensure that you hire Americans legalized. You are wise to check your new employees are drug-free. You must obtain the correct mailing address and contact numbers of emergency in case they hurt at work.
Theft Prevention
Accounting procedures are designed to steal your money to someone without warning signs. When they are carefully monitored to prevent theft, even taking into account the lessor.
No matter how much you trust your accountant and employees, you need to monitor internal systems for processing with money.
SUPPLIERS OF WARRANTY EXCHANGE legitimate
The flight can be spun in several ways. You should consider any attempt by a supplier over bill you for the flight. Someone needs to review vendor invoices for the quantity and price against the original order.
Registration SILVER
Here is a warm and fuzzy story for you. The founder of a mechanical contractor was forced to retire and return to him on a late successor was stolen more than 1 million U.S. dollars and disappeared.
You must have adequate procedures to control the flow of funds and whether the money has gone well. It was intended to keep an eye on your bank accounts and cash.
It is hard for the money when the market and steal to be closely monitored by someone who ran not the books.
Terms of the lease payments and review own
Leasing companies are, the money is, rightly, that they are not known. They do this in a number of ways, be they preferred not tell you if you paid rent. Yes, you can actually keep the payments and have little buried clauses in their contracts that they keep the money after having paid in error to leave!
Your accountant should remain in close contact with the leasing company and comply with a payment for each separate piece of equipment rented. It is the only way to prevent the tear after another.
CASH MANAGEMENT
Fund management
About the only time that small entrepreneurs have the extra money immediately after the end of the season, if their claims hold, but the roles in labor and material costs are eliminated.
Any other time of year when decisions must be taken to pay bills on time to keep as much cash to be purchased for tax filings, and as new devices.
You must keep a watchful eye on your cash. A detailed budget cash flow is the best way to keep your cash.
GATHERING OF DELAY IN CLAIMS
Here’s a nasty part of every business: To fetch the money, if your client will draw its feet on the payment.
He really works at it. They had an agreement. She led the service, he has created for you. He must pay on time.
Not doing so means that it is not the type of client you want to do much work because he consistently priced higher than other customers for the same work.
Build and manage your credit
Lines of credit are to operate a business imperative construction. Caused many problems if you do not have access to easy money – is what a credit line for you.
You need a strategy to build a line of credit amounting to 10% of annual turnover.
The banks do not immediately like candy. You need to leave money in the company, which strengthens your balance sheet and reduces the risk of failure of your line of credit.
LINKS AND COMPLAINTS
Unfortunately, privileges and claims are often a necessary tool in construction. Some customers simply do not pay their bills until forced. Links create headaches for them. Claim, action will be necessary in most cases, if the links do not work.
PROFESSIONAL SERVICES
Develop relationships with banks
You need to develop a relationship with a banker, go to the, bat for you. Not many are. You’ve heard of hunting, and follow their advice.
If you do this, they will help you solve problems when you need money the most to help. Otherwise, you will be bound to a financial conglomerate think it is very difficult to escape, too.
Building relationships of bonding and insurance agents
I found that the pension and insurance agents, the most reliable source of knowledge and advice you can type (including me, of course, are the exception). These agents will help keep insurance costs, processing forms you need jobs, and direct the financial management of your business – all for free.
Classification and evaluation of your CPA
Here’s the best advice I can give you: The Hunting of the CPA, whose clients almost exclusively of contractors.
Construction accounting is so unique, the IRS has made another set of guidelines for the use of revenues is. Few understand the nuances of the accounts of the construction accounting.
Find an accountant who knows WIP inside and outside (if you ask what is WIP, you have) the wrong accountant. Find an accountant, the cost of goods sold will must contain material costs. Find an accountant who you are, how you take the best aspects of the financial advice business.
At the appropriate insurance
This is where your insurance agent to come into play. You must ensure that they do not let your reports that you would not leave gaps, everything to lose, and you must ensure that you will double in activities not covered by other contractors.
We are tired of systematization YOUR BUSINESS!
Yes. We’ve reached the end. In retrospect, it is not easy, the systems you need to implement to manage a real business?
Hardly.
If you’ve read the series rich set of articles on how to get Contractors, you’ve read about 30 pages to explain the six systems of your business needs. We do not go into details. Scary, huh?
This is why so few entrepreneurs in building real companies, those who have the money goes into the road while other activities must be required to succeed.
This is also why almost every entrepreneur needs help (mentor, friend, business partner, coach) the identification and determination of the most priority. Much time and money lost focus is on problems whose solution does not grow the business.
It’s your job, your life and your decision.
Ron Roberts, The Contractor’s Business Coach, teaches contractors how to turn their businesses into money making machines. To receive Ron’s FREE Contractor Best Practices Newsletter visit
http://www.FilthyRichContractor.com.