General Contractor Hired Inexperienced Bookkeeper

Introduction

‍A reputable general contractor, specializing in small niche construction projects, faced unexpected financial discrepancies despite a history of profitability. The company relied on a part-time bookkeeper and minimal financial oversight, focusing primarily on operational compliance rather than strategic financial management.

Challenges

‍The contractor's financial challenges came to light when their CPA noticed a decrease in profitability during an annual review. Upon investigation, the contractor found that the part-time bookkeeper provided vague responses and eventually ceased communication, leaving the financial records in disarray and job costing largely ignored.

Solution Implemented

‍To rectify these issues, RedHammer was brought in to overhaul the financial management system:

• QuickBooks Reconfiguration: The accounting software was fully reconfigured to align with construction-specific accounting needs.
• Best Practices for Job Costing: Standardized procedures were introduced to enhance job cost reporting and tracking.
• Paperless Accounts Payable System: Implemented a paperless approval system to streamline vendor payments and reduce errors.
• Financial Education: The owner was trained on how to effectively read and interpret financial statements.
• Regular Financial Reviews: Instituted weekly financial reviews to monitor job progress and budget adherence.

Results

‍The intervention led to significant financial improvements:

• Increased Gross Profit Margins: Tighter control and enhanced job costing accuracy directly increased profitability.
• Enhanced Financial Oversight: The contractor gained better visibility and control over expenses.
• Security and Peace of Mind: RedHammer’s oversight ensured reliable financial management without direct control over payments, providing additional security and peace of mind.

Conclusion

‍This case study exemplifies how targeted financial interventions can resolve underlying issues in construction accounting, leading to enhanced profitability and operational efficiency.

Call to Action

‍Struggling with similar accounting challenges in your business? Contact RedHammer today to see how our specialized accounting solutions can help streamline your operations and boost your bottom line.

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