REVIEWING YOUR CURRENT FINANANCES both incoming payments and outgoing expenses . In addition , try to organize expenses by category , such as materials , labor , equipment , and overhead : This method helps you to understand where your money is going and to spot cost-saving opportunities .
Contractors are advised to review job costs and profit margins as well . Double-check each job ’ s costs , including direct labor , materials , and overhead . This procedure will help you determine if you are accurately bidding on jobs and maintaining profitability . You should also compare the estimated costs vs . actual costs for completed projects , and if margins are lower than expected , analyze what factors contributed to this disparity .
Examining your accounts receivable and payable is another good practice . Send out invoices on a regular basis and follow up on outstanding balances to keep cash coming in . And for expenses , negotiate favorable terms with suppliers and vendors to better manage the cash flow .
Don ’ t forget to estimate your overhead costs : Include ongoing costs like insurance , equipment maintenance , and office expenses in your budget . It is also a good idea to set aside funds for future investments , such as new equipment or employee expansion .
Also set your financial goals by having monthly and quarterly objectives . Make sure your short-term goals are realistic by creating revenue targets and expense reductions . In the long term , plan for annual growth — increase your profitability by a certain percentage or expand your service area .
Financial or accounting software can also help you keep track of your expenses . Quickbooks ® — the contractor version can help manage invoicing , expense tracking , and job costing . Consider tools that integrate with accounting software to streamline the process .
Finally , you may want to consult with a financial professional : Working with an accountant experienced in the construction industry can help you better understand tax deductions , slash liabilities , and create a strategy to meet your financial goals .
Merriwether & Williams , a HUB International Company , is also prepared to offer you financial guidance and assist you with as bidding and estimating . Contact us at ( 510 ) 740-6922 or ctap @ imwis . com .
SPRING 2025 CONTRACTOR REPORT - 15