Beyond Bookkeeping: What is a Construction Accountant?

At Mobilize, everything we do is centred around one goal, Profit Every Project.

To do this, we are carving out a new role in the space of administration, accounting, and leadership… that is the construction accountant.

Working with a construction accountant is a true financial partnership. Strategy, ownership, and education are foundational to our work together. We uncover truths about your financials that lead to informed decision making.

If you issue an estimate for 50% gross profit margin, we need to know if the project actually made 50%. Without knowing this, you risk under-pricing every single job that you estimate.

Our financial partnerships are focused around three core functions: bookkeeping, job costing, and financial leadership. We have found that, throughout the ancient industry of accounting, everyone has stuck to their traditionally defined roles. Your bookkeepers do bookkeeping. Your accountants file your taxes.

At Mobilize, we escape the handicap of strict roles and instead focus on what will move the needle for you.

By delivering bookkeeping with job costing (which few professionals offer) and then communicating its results and insights with you, we take ownership of the success of your projects. This is well beyond a simple monthly bookkeeping gig.

So, that's the theory (and the promise), but how does it work in practice? That's what this article is here to explain. Specifically, we cover:

• The value of bookkeeping and job costing
• Our bookkeeping and job costing process, and your responsibilities
• How we work alongside you, your administrator, and your accountant

Let's dive in!

Why do I need Bookkeeping and Job Costing?

At the core of our financial partnerships is bookkeeping and job costing. Why? Well, these two functions are where future profitability is generated.

Through quality, highly detailed bookkeeping we can present your financial picture through a clear and vetted lens. In other words, we know the details of every transaction and confidently present our findings.

Job costing takes our bookkeeping efforts one step further, giving you cost details for every single project. You can now read a mini profit and loss statement for each project.

Then, the real magic happens.

With detailed construction bookkeeping and job costing, you can rely on data to make decisions with confidence.

Together, you and your construction accountant will tackle the question "how did we do on our last project compared to what we estimated?" The answer lies in job costing data, which we compare to your estimate.

For example, if you aim for 50% gross profit margin on every project, you'll need to know if you achieved that target on your last job before you price the next one. The only way to do this is to compare your estimate to your job costing results.

Perhaps material costs were higher than you estimated.
Maybe there was scope creep (i.e., extra work) that never got invoiced.
Or, as is often the case, the actual project delivery (i.e., labour) took longer than expected.

Whatever the case, we can't change the past. But we can and should uncover these truths so we can reach 50% gross profit on the next one.

This is why bookkeeping and job costing are vital to your profitability.

How do Bookkeeping and Job Costing work in practice?

Good question. It's the right one to ask, because the proper setup is absolutely essential to making these efforts worth it.

At Mobilize, we have engineered a process that minimizes your time in the books while also delivering the high detail that is promised.

For you, the contractor, here's the exact process that you can expect.

Information Sharing and Communication

High-detail bookkeeping and job costing requires that you share the following information every month:

1. Bank statements. Often sent automatically from your bank through QuickBooks.
2. Receipts and supplier statements. We can connect with your suppliers directly.
3. Project names on every bill. We need every receipt/bill/supplier statement to be assigned to a project.
4. Employee hours spent on each project. Likely already captured with your payroll process, and an easy addition if not.

That's it. One and two are more or less automated. Three and four require a simple mention of a project name.

The Bookkeeping Process

Once you share the above information, most of your work is already done!

Bookkeeping and job costing is our wheelhouse. We take care of it while you tackle more pressing matters.

Here's exactly how we do it:

1. Confirm your invoicing accuracy. We make sure everything is tagged to a project, the taxes are correct, and payments are recorded.
2. Process bills, receipts and supplier statements. We categorize every single transaction and tag it to a project.
3. Categorize the stragglers. For any transactions that don't have a receipt, we categorize those too.
4. Final sweep. We reconcile your books with the bank statement every month, with no exceptions. This is an essential step to ensure that we've caught everything. Once confirmed, we close the books from future changes.

Tying Up Loose Ends

Sometimes we have questions about specific transactions that need your verification.

The questions we usually have are:

• What was this expense for?
• What project does this expense belong to?
• Who paid you this deposit/what invoice does it belong to?
• Do you have a receipt for [a specific transaction]?

When we have questions on specific transactions, they are typically very simple questions that can be wrapped up with 30 minutes of focus.

Putting our Data to Work

Every month, you receive an updated set of financials that provide insights for us to process and act on. In our monthly Profit Every Project Meetings ("PEP Talks"), you and your construction accountant will dive into the financials.

The PEP Talks focus on:

• Achievement of financial benchmarks. We establish a set of metrics that we aim to reach every month.
• Job profitability results. We unpack what happened each month and how that impacts your financial statements.
• Project estimate vs. actual comparison. We compare expectations to reality and draw insights for pricing jobs in the future.

Where a bookkeeper can update your books every month, a construction accountant goes deeper to present financials at the project level and ensures they're being used to drive decision making.

How does this fit into my current process?

Consider a construction accountant as your organization's financial leader. Beyond the standard functions of accounting, administration, and invoicing, a construction accountant leads the financial functions of your organization.

As your construction accountant, we ensure that your processes and personnel are aligned with your financial goals.

In other words, we are interested in aligning your current process with your business ambitions, and we provide the leadership required to deliver on that.

We have seen many different processes and roles that help an organization function. Here's how we work alongside your current roles.

• You, The Contractor. We understand that you're busy, and therefore try to minimize the time you spend on this. Providing required information is essential, and engaging with your finances every month is what will maximize your investment.
• Administrative Personnel. If you have anyone in the office helping you out with invoicing, estimating, or other administrative functions, this person will be a key piece to the partnership. We assist them in redefining their workflows to align with the new process. This person often becomes your construction accountant's main point of contact for questions and information.
• Your Accountant (CPA). We love working with knowledgeable and compliant CPAs, and appreciate their assistance with wrapping up year-end financials. If you'd like to shop around, we can connect you with trusted professionals.
• Your Bookkeeper. If you're here, things may not be working out with your current bookkeeper, in which case this function would be handled by us. Alternatively, if you plan on keeping your in-house bookkeeper, we implement the new job costing process and help tweak their role accordingly. They take care of the bookkeeping and job costing, and we work with you on using the numbers effectively.

Financial partnerships are the strongest way to align your financial and administrative functions, put strong data to use, and ultimately, to Profit Every Project.