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Bookkeeping Tips For Small Construction Businesses
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Bookkeeping Tips For Small Construction Businesses

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Bookkeeping Tips For Small Construction Businesses

Bookkeeping is probably the most undervalued area of any business, it is seen as an expense or a chore to do however it's the foundation of your finances. The higher quality of your bookkeeping, the better conversations you can have about your business performance.

Bookkeeping needs to be done daily, if you are currently doing it once a week or even once a month it means you’re not using the data you have available in front of you. By using a bookkeeping software like Xero you can see exactly where your money is going, break down your costs, use extra features like tracking codes to see your job profitability on a weekly basis so you know exactly how each job is performing and whether it is financially on track.

Here are some simple tips on how to keep on your top of your bookkeeping:

1. Invoice for every job as soon as possible

We all understand that invoicing can get very detailed or start to stack up very quickly however at the end of the day this is how you are going to get the money coming in. Ideally you will be using a software that allows you to invoice on go and send an invoice to your client there and then. 

Another alternative is to use a Construction Virtual Assistant, you can give them a quick call or send over WhatsApp the information that is required and they can create a professional invoice to send directly to your clients saving you the time and stress of making sure you have invoiced everyone for that week!

2. Processing your bills

If you are using Xero you will have access to HubDoc for free, this is a receipt processing tool which allows you to take a photo of your receipt and process it directly onto Xero. You are also able to forward any email invoices directly to HubDoc as well.

If your bookkeeping is up to date, you can trust the information in front of you and use Xero to see what bills you have to pay and when.

3. Paying your bills

You can either pay your bills exactly when they become due or sit down once a week and prepare your payment run for everything that is due. Paying on time will help build good relationships with the suppliers and subcontractors you are working with.

4. Reconciling your bank

Every bookkeeping software will require you to reconcile your bank transactions to ensure everything has been processed correctly.

Reconciling just means matching, you are matching what has gone through the bank to what information you have on Xero i.e. matching a client payment to their invoice, matching your monthly payment to your supplier to the individual invoices for the month.

By doing this you will have up to date information on what invoices/bills are outstanding 

5. Chasing Money

If any invoices have gone past their due date, you need to have a credit control procedure in place. You need to be consistent with chasing money as some people are hoping that you forget.

You also need an escalation process, what happens if you have sent 4 or 5 emails requesting payment with no response? What are the next steps from here?

6. Managing Payroll

Payroll submission will be required every time you pay your employees, this is usually done monthly. When you complete your payroll there will be a payday selected, this is when your employees must be paid.

With payroll, you will also see national insurance, income tax and pension deductions, these need to be processed and paid accordingly. If you are unsure about payroll, it is recommended to speak to an accountant

7. Stay on top of VAT Returns 

If you are in Construction working for contractors you are likely to be using Domestic Reverse Charge which means your VAT Returns will be on a refund basis. If you are on top of your bookkeeping it makes the VAT return much simpler and the faster you can get your VAT return submitted, the quicker HMRC can process the refund which can be a nice boost to your cashflow.

If you are ever struggling with your bookkeeping/looking after your finances, it is worth using construction accountants and bookkeepers who understand your industry and can provide advice based on what you are going through.

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This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

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Bookkeeping Tips For Small Construction Businesses

Written by the team at:

Saint Accountants

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