Category: Construction Accounting Basics
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Why Growing Contractors Run Short on Cash: Overbilling, Underbilling, and Retainage
Revenue is up sharply over last year. The backlog is strong. The crews are busy. And there is less cash in the operating account than there was twelve months ago, with no obvious reason why. This is the most common cash problem in contracting, and it hits good operators hardest. Nothing is being stolen. No…
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Cash Basis vs. Accrual Accounting for Builders: Which One Should You Use?
Construction Accounting Basics Your P&L says you made $180,000 this year. Your bank account doesn’t agree. If you’ve ever stared at those two numbers wondering which one is lying to you, the answer isn’t a bookkeeping error — it’s the accounting method behind them. Cash basis and accrual basis tell two different stories about the…
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Job Costing 101: How to Know Which Jobs Are Actually Profitable
Construction Accounting Basics Ask most builders which job made the most money last year, and you’ll get a guess based on gut feel — not a number pulled from the books. That gap is job costing, and it’s the difference between running a business that happens to be profitable and one that knows exactly why.…
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What Is a WIP Schedule — and Why Every Custom Builder Needs One
Construction Accounting Basics If you’ve ever handed your bank a financial statement and gotten a follow-up question you couldn’t quite answer, there’s a good chance the missing piece was a WIP schedule. A work-in-progress (WIP) schedule is the single report that tells you — and anyone else looking at your business — whether your open…