2020 has been a year with many new challenges faced from increasing costs to safety concerns. Some of these changes required you as the business owner to make big decisions quickly and sometimes without all the information needed to confidently do so. Additionally, you might have found yourself sorting through a lot of receipts, bank statements, or financial reports and still not having accurate information about your business. This is a sign of not having your financial foundation properly set up.
Table of Contents
What is your financial foundation?
What do we mean when we say your “financial foundation or base”? This is made up of your chart of accounts, cost codes and list items and needs to be set up in a way that makes sense for your business. When it is set up, you will be able to file your taxes correctly and also produce accurate financial reporting. This includes:
- Classes
- Customer lists
- Vendor Lists
- QuickBooks Online (QBO) functionality settings
- QBO bank connections
- Recurring transactions
- Custom reports
Importance of your foundation
Similar to building a house, you need a strong foundation for the long term stability of the structure. For your financials, you similarly need a base or foundation for all of the numbers to make sense and give a clear and accurate picture that decisions can be based on. This piece is so important and oftentimes is overlooked. If your foundation is not in place, you will likely have some of these issues:
- Unable to get accurate costs
- Don’t know how your money is being spent
- Inaccurate reports
- Difficulties integrating project management and financial software
- Unclear if you are making or losing money
Benefits when it is set right
When your foundation has been set up properly, managing your business and making decisions will be much easier. You will have confidence in your financials and your reports will be clear, providing you the information on the “financial buckets” that you care about and also giving you the information to spot trends over time. The chart of accounts will provide the right buckets to categorize your transactions so you have a clear understanding and view of your company’s financial health. The cost codes will provide the detailed line items on your estimates, time and other construction costs. Streamlining your financial workflow with additional software integrations and automation will also save you time and headaches. All in all, your financial foundation is the base for your entire workflow and it just won’t work if it is not set up correctly…period!
Where to start?
Now you understand what your financial base consists of and the value of having it set up correctly, how do you make it happen? 24hr Bookkeeper has comprehensive experience with finance and accounting in the construction industry and knows what details you need and care about to operate your construction business. We know how it should work and can help you navigate, organize and put all of the pieces together in a way that makes sense for you — for now and for the future. Although we don’t know what 2021 might hold, we do know that accurate financials are a must for success. Now is the time to act to head into 2021 with a solid financial foundation!
