Working in the construction sector means you open yourself up to some interesting financial considerations. Many of these are things you don’t even think about until someone points them out, so that’s what this blog will do! You’ll identify three key financial areas of your business that need to be addressed and can work on handling them before anything gets out of hand and costs you a lot of money. Using the right bookkeeping services for your software platforms
Most contractors and construction companies will use ServiceTitan as their software platform for just about everything. It allows you to create and send invoices while scheduling jobs, and so on. You rely on it daily, but this means you need specialized ServiceTitan bookkeeping services that work with your daily processes.
The common mistake is to rely on standard bookkeeping software or services that don’t integrate with ServiceTitan or whatever software platform you currently use. This leads to wires getting crossed, payments being missed, and inaccurate bookkeeping that costs your business time and money.
Improper job costing
Don’t make the classic error of pricing your services before you know what you’re doing. Some construction companies do this because they think that prospective customers prefer to see the prices up front. It looks like you’re being a transparent business, but this is devastating for your financial health.
The issue is that no two jobs are the same, even if you provide the same service. The extension you built for one client may take half as much time and resources as the one you built for someone else. You can’t afford to price jobs like this, as you’ll end up losing money. Instead, the best approach is to offer free quotes for your service. This gives you time to assess each job, determine how much time and effort it will take, and then price accordingly. Customers have no obligation to go ahead if they don’t like the quote, so you still retain that transparency.
Don’t make the classic error of pricing your services before you know what you’re doing. Some construction companies do this because they think that prospective customers prefer to see the prices up front. It looks like you’re being a transparent business, but this is devastating for your financial health.
The issue is that no two jobs are the same, even if you provide the same service. The extension you built for one client may take half as much time and resources as the one you built for someone else. You can’t afford to price jobs like this, as you’ll end up losing money. Instead, the best approach is to offer free quotes for your service. This gives you time to assess each job, determine how much time and effort it will take, and then price accordingly. Customers have no obligation to go ahead if they don’t like the quote, so you still retain that transparency.
Underbidding on construction job contracts
This issue blends into the one above, but it refers to when you bid on certain job contracts. This is a popular source of income for construction companies, as bidding on contracts usually means you’re tied into work for an extended period. E.g. You win the bid to become the contractor for a big coffee chain that wants to refit all of its stores.
Opportunities like this are lucrative, but the problem is you’re so keen to secure the contract that you underbid for it. The company offering the contract will obviously pick you because your fee is way less than everyone else's, but it turns out you didn’t estimate the true costs properly. It’s always better to overbid than underbid in these situations, as it prevents you from taking on a long contract that actually ends up costing you money.
All it takes is a little bit of financial literacy to understand where your construction business is going wrong. Start with a more process-focused bookkeeping service that integrates with your daily workflow, and then get better at pricing your jobs and bidding on contracts to avoid losing a lot of money.
This issue blends into the one above, but it refers to when you bid on certain job contracts. This is a popular source of income for construction companies, as bidding on contracts usually means you’re tied into work for an extended period. E.g. You win the bid to become the contractor for a big coffee chain that wants to refit all of its stores.
Opportunities like this are lucrative, but the problem is you’re so keen to secure the contract that you underbid for it. The company offering the contract will obviously pick you because your fee is way less than everyone else's, but it turns out you didn’t estimate the true costs properly. It’s always better to overbid than underbid in these situations, as it prevents you from taking on a long contract that actually ends up costing you money.
All it takes is a little bit of financial literacy to understand where your construction business is going wrong. Start with a more process-focused bookkeeping service that integrates with your daily workflow, and then get better at pricing your jobs and bidding on contracts to avoid losing a lot of money.
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