Subcontractor Unable to Secure Bonding

Introduction

‍A specialty subcontractor generating $10 million in annual revenue struggled with outdated accounting processes, which stymied their ability to secure necessary bonding. The company's reliance on an untrained staff for financial management and improperly configured QuickBooks system compounded their challenges.

Challenges

‍Despite growing revenues, the subcontractor's financial reporting was delayed and inaccurate, hindering their ability to obtain bonding. Project managers lacked real-time insights into job performance, which was critical as they were accountable for job profitability but lacked the tools to monitor ongoing projects effectively.

Solution Implemented

‍RedHammer intervened with a comprehensive overhaul of the accounting practices:

• QuickBooks Standardization: The software setup was standardized to suit construction-specific needs.
• Cost Codes Implementation: Introduced standard cost codes to enhance budget and cost tracking.
• Paperless Accounts Payable: Implemented a paperless system for routing approvals to streamline payments.
• HR Integration: Linked accounting systems with outsourced HR services for better payroll management.
• Project Management Meetings: Instituted bi-weekly meetings to review job costs and budget compliance.
• Financial Projections: Developed detailed 12-month financial projections to plan for staffing and workload.

Results

‍The subcontractor experienced a 22% reduction in accounting overhead costs and significantly improved the efficiency of their payroll and accounts payable processes. The bi-weekly project management meetings enabled more accurate job costing and budget management, facilitating timely and informed decision-making for future bids.

Conclusion

This case study illustrates how professionalizing accounting practices can resolve bonding challenges and improve operational efficiencies in the construction industry.

Call to Action

‍Are you facing similar challenges in securing bonding or managing construction finances? Contact RedHammer today to discover how our accounting solutions can streamline your operations and enhance your financial stability.