Archives for January 2025

Job costing is essential to any business’ bottom line, but it’s especially crucial in the construction industry. The ability to effectively and accurately estimate your job costs on a project can set you up for success or put you on a course for disaster. What is job costing? Job costing is a method of calculating the actual costs of working on a construction project. It takes the overall project and… Read More

Cash is king in construction. Being able to effectively maintain cash flow throughout the project is vital to successfully completing a job. Sometimes this takes some creative maneuvering. One way this is accomplished is through the controversial, but common, practice of front loading a schedule of values. Schedule of values recap A schedule of values is a list of work items representing the entire construction project from start to finish…. Read More

Cash greater than 5% of annual revenue (non-borrowed): Contractors should maintain an available bank line of credit of at ‘least 5% of annual revenues; in addition, cash as reported on the contractor’s annual financial statements must exceed overbillings, with any differences maintained or tracked through accounts receivable. Tangibility equity greater than 15% of annual revenue-Stated equity as reported on a contractor’s financial statements is adjusted to remove goodwill, related-party receivables,… Read More

Accounting is the backbone of any business, ensuring smooth financial operations and compliance with regulations. However, for contractors juggling multiple projects and responsibilities, it can feel more like a “necessary evil” than a helpful tool. This article delves into the reasons behind this perception and offers solutions to turn accounting into a manageable and even rewarding aspect of a contractor’s business. Understanding the Role of Accounting for Contractors The Dual… Read More

Commercial contractors need surety bonding to build trust with clients, meet regulatory requirements, and manage project risks. Surety bonds act as a financial guarantee that the contractor will perform their duties according to the contract terms. Here’s why surety bonding is especially important for commercial contractors: Assurance of Project Completion: Surety bonds guarantee that the contractor will complete the project as per the agreed terms. If a contractor defaults, the bond… Read More

Increasing bond capacity is crucial for commercial contractors looking to take on larger projects or more projects concurrently. Bond capacity depends on a contractor’s financial stability, experience, and project management practices. Here are some steps contractors can take to increase their bond capacity: 1. Strengthen Financial Statements Enhance Working Capital: Working capital (current assets minus current liabilities) is a major factor in bond capacity. Contractors can increase working capital by… Read More