As tax and accounting firms continue to discover new opportunities for advisory services and nichespecialization, the construction industry has become a target. Because many construction companies face mounting technological demands, labor shortages, regulatory issues and increased consumer demand for eco-friendly materials, professionals who understand the industry’s challenges and can facilitate solutions are becoming increasingly valuable. In this article, we’ll discuss the key opportunities within the construction industry, and offer advice on how to establish your firm’s presence within this underserved sector.
Contractors within the construction industry often face many financial problems and project delays because they lack internal control systems and unclear or incorrect financial data. Many of these challenges can be addressed by a firm, but there are also additional opportunities for professionals who offer outsourced CFO services.
Improper job cost accounting. Correctly mapping expenses to their respective projects is vital to success within an industry as capital intensive as construction. Generally, job costing allows a company to come up with a reliable estimate of the total costs for a specific project. Proper job costing enables contractors to account for project costs, such as materials or labor, and overhead expenses, including travel time or equipment rentals. Because many companies estimate projects based on erroneous financial data, contractors often misallocate costs and are unable to determine the true profitability of their projects.
Lack of financial analysis and forecasting. Tracking financial reports and analyzing opportunities for efficiency or growth are essential activities for all companies. As material costs fluctuate and technological advances occur, financial forecasts can help companies handle cash shortages, and discover new opportunities for efficiency and profitability. Without this data, contractors struggle to maintain sufficient cash reserves throughout the year, and may incur additional loan debt for upfront labor and material costs.
Navigating industry changes and regulations. Tariffs and sustainability issues are among the top concerns. Contractors face an increasing amount of scrutiny regarding environmental sustainability and seek to implement emerging technologies.
Three Steps to Developing an Advisory Workflow
Creating a niche within the construction industry allows your firm to anticipate the unique needs of construction clients. The right tools and appropriate education can place your firm at the top of this profitable industry.
#1: Define your target audience. While it may be easy to assume that all companies within the industry are the same, this is not true. As Diane Gilson discussed in her article on serving the construction niche, “[Different] construction companies operate differently, are run by varied personality types, have unique accounting requirements and will require specific management reports.”
Here are a few of the many types of companies within construction:
- Contracted specialists – plumbers, electricians and HVAC technicians.
- Production home builders.
- Land development companies.
- Speculative developers.
#2: Immerse yourself within the industry. It’s best to further research the needs of construction clients within your local and regional area. While education is essential, involvement with business owners is also critical to establishing a credible presence. Here are a few resources that may help you learn more about important news, events and networking opportunities:
- Construction Financial Management Association (CFMA): Since 1981, the CFMA has supported financial professionals within the construction industry. They offer a beneficial introductory course for accountants interested in serving the construction industry.
- CPAs Who Know Construction (CICPAC): The CICPAC community features industry professionals dedicated to supporting more than 11,000 construction clients and 75 accounting firms, as well as serving as a resource for related audiences such as sureties, attorneys and bankers.
#3: Know the popular tools within the industry. As an accountant advisor, your firm’s toolset is a critical component of client service. While your toolset obviously affects your efficiency, knowledge of the options available may also help you serve clients who’re entrenched within a specific, unfamiliar infrastructure. Here are a few suggestions for tools you may encounter or find useful as you implement your firm’s construction niche:
QuickBooks Online – The Projects feature in QuickBooks Online lets you add income and expenses to a project. You can also tag old transactions to new projects and run project-specific reports, all from a single dashboard. Having a single dashboard allows you to manage your work and see the overall progress more easily.
TSheets by QuickBooks – This software enables employees to use their smartphone to record the time they’ve spent on a project. It also allows them to tag specific jobs, allowing for better job costing in QuickBooks Online. Construction companies can configure different levels of access for managers and crew members, and set up geofencing for a specific area.
Receipt Bank – Using the ever-present smartphone camera, Receipt Bank allows workers in the field to assign costs to a specific project. Because ReceiptBank integrates with QuickBooks Online, workers can tag a specific project when taking a picture of a receipt. This reduces the time it takes to chase employees down to determine where costs should be assigned.
Buildertrend – Designed especially for custom builders, remodelers and specialty contractors, this software offers crews a comprehensive solution that incorporates sales, project management, finances and a customer management system into one place. Buildertrend integrates perfectly with QuickBooks Online, making it easy for you to work with clients established in this system.
In addition to the BuilderTrend integration and available apps, QuickBooks Online also integrates with other popular construction-oriented software tools. These integrations allow you to harness the powerful features of QuickBooks Online, while collaborating with clients in an environment that’s familiar to them. You can find a list of tools on the QuickBooks App Store.
Build Value With This Niche
As our roles grow and change, the construction industry provides advisory service opportunities for firms to provide the necessary assistance. Equipping your firm with the right knowledge and tools to take advantage of this ever-growing industry offers additional opportunities for your firm’s continued growth in the future.
Author’s Note: This article was originally published on Intuit’s ProConnect blog for accountants and tax professionals. You can find the original article here.