Where do I start? When it comes to finances, the construction industry is a bit like a Saturday night out after one too many pints – unpredictable, messy, and sometimes leaves you feeling a bit worse for wear. We all know that feeling.

As a construction firm owner, you’ve often got multiple projects on the go, each with its own unique set of challenges. Customers can sometimes be a right pain in the neck, especially with not paying invoices on time, and then there’s material costs that change more than the weather in Manchester.

And that’s not all… Trying to keep track of your finances on top of all that is enough to drive anyone up the wall. Construction is notoriously known for being a volatile industry. Things like delayed payments and cash flow inconsistency play a massive part in that. It’s also why it comes as no surprise that there’s a high failure rate in construction.

Here’s where I come in and essentially turn all your sh*t situations into roses. But first, let me explain how construction differs from other industries. Understanding this will highlight the importance of why choosing an accountant that specialises in this industry is essential.

Construction vs. other industries

Construction is in a category of its own. It faces completely different challenges to any other industry. Each project has its own individual problems and as a result, construction businesses often struggle to match the efficiency of companies that have more of a repetitive and controlled production, such as factories and certain types of office-based work. But, who wants to do the same thing day in and day out anyway?

Here’s are some of the key differences that you can expect from owning a construction-based business:

Variable costs – For materials, equipment and labour on each individual project. You’ll know from pricing jobs up that the costs vary, it’s not a one cost fits all type of thing.

Location – Construction often takes place at new locations with specific site conditions, each with their own set of challenges. You might well have to deal with local environmental and waste disposal regulations.

Suppliers – Having to rely on specialised suppliers for different projects can affect efficiency and cash flow. Such as, certain types of glass, lifts and escalators, steel beams, cladding etc.

Contracts – Construction contracts often include retainage, where some of the payment is withheld until project completion, even if specific work stages are finished. (Note: these can be negotiated before signing the contract).

Now that you understand the differences in construction in comparison to other industries, it’s time to look at what challenges you can expect to face as a result, and how I can help you overcome them.

Common construction challenges

Given these unique characteristics, construction businesses face several common financial challenges:

• Cash Flow Fluctuations: Irregular cash flow is a common problem due to delayed payments, upfront costs, and subcontractors.
• Cost Overruns: Projects can easily go over budget if costs are not carefully tracked and managed.
• Profitability: It can be difficult to accurately estimate and track profit margins on individual projects. Particularly when material costs go up significantly after you quote for the job.
• Debt Management: Managing debt can be challenging, especially during economic downturns. (A feeling we’re all familiar with thanks to Covid-19).
• Tax Compliance: Staying compliant with complex tax regulations, particularly VAT reverse charge scheme and CIS payroll is essential to avoid penalties and fines. (You need to be able to understand these tax regulations in order to stay compliant, but don’t worry I can help with this).

How I Can Help

I’m showing my age here, but as an accountant with decades of experience helping construction business owners, I can help you manage these challenges and improve your overall financial situation. Here are the things I would start with:

• Financial Analysis: I’ll provide a comprehensive analysis of your financial situation, including your cash flow, profitability, and overall financial health.
• Cash Flow Management: I’ll help you develop strategies to improve your cash flow, such as optimising invoicing and taking payments, negotiating better payment terms with suppliers, and looking at what your alternative financing options may be. (There’s not an array of financing options out there for construction businesses, but there are a few strings I could pull on).
• Cost Management: I’ll work with you to identify areas where you can reduce costs and improve your profitability. This could be renting equipment instead of buying it, or negotiating with subcontractors etc.
• Tax Compliance: I’ll ensure that you’re compliant with all relevant tax laws and regulations.
• Financial Planning: I can help you create a financial plan that aligns with your business goals.

In addition to all of the above, I’ll be on the other end of the phone whenever you need a bit of advice or just fancy a chat. Something I definitely won’t do is judge, so complete transparency is always encouraged. I’ll work with you so that as a team, we can transform your financial situation from, you guessed it – sh*t to roses.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Taxman knocking? And not knocking quietly? Here’s how to handle an HMRC investigation:

Ever had that sinking feeling when you get that brown envelope with ‘HMRC’ written on it drop through your letterbox?

I experienced a similar feeling recently when I went to the doctor and was told I needed to change my diet. Seriously? The weekly Chinese was under threat! Gutted.

You know you should open the envelope. And you know it’s not an unexpected tax rebate. Of course, it could just be that an employee’s personal tax code has changed. But still that feeling of dread is real.

So, what do you do if the taxman is on your case and being a real pain in the backside? I’m no stranger to this topic, although I’ve learned over the years that everybody’s situation is different. Some are more challenging than others. But the one thing that doesn’t change is my advice on how to deal with it. So let’s get into it.

Understand Why They’re Here

Before you start responding to the taxman’s questions, try to work out exactly why they’re investigating you. Have you missed a deadline? Made a mistake on your tax return? Or is it something more serious? Once you know, you can start to prepare your response. Being honest with me is important when I ask you these questions. Trying to cover up stuff here with me or HMRC can just bring a whole heap of the brown stuff down on you.

Or maybe you already know the reason, and it’s just the inevitable catching up with you. In that case, it’s time to deal with it before it gets any worse. You don’t want to be caught standing in court with all the truth coming out? I’ve seen it happen, and it ain’t pretty. It’s pretty stressful if your case goes to court.

Regardless of whether you know the reason or not, here’s what I would suggest you do next:

Be Cooperative

It’s important to cooperate with the tax inspector. Answer their questions honestly and provide any documentation they request. I know it’s hard not to get your back up when you’re feeling accused of something, but try not to be too defensive. Remember, the more you cooperate, the easier the process will be for everyone involved. As your accountant, If I can show that you have been cooperative, this could reduce any penalties that the tax man wants to make you pay.

Seek Professional Help

If you’re feeling overwhelmed, consider seeking professional help. Get in touch with someone who knows their stuff. (Hint: I’m right here. I’m just a phone call away, and I wouldn’t judge.) An accountant can provide invaluable guidance and support throughout the investigation, even if it’s emotional support that’s needed. They can help you understand your rights and responsibilities, and they can negotiate with the taxman on your behalf.

A decent accountant should give you peace of mind, ensuring you’re compliant with tax laws and regulations. It’s important to choose wisely if you’re going down this route. Always do your research before you make a decision.

Proactive Measures to Avoid Investigations

The best way to avoid an investigation is to be proactive about your tax compliance. Here are some of my suggestions:

• Keep accurate records: This is the most important thing. Make sure you keep detailed records of all your financial transactions. The first thing I will want to do to help you – regardless of any HMRC investigation – is to get your books clean and up-to-date.
• File your tax returns on time: Don’t miss any deadlines. That’s a fine you do not want or need.
• Pay your taxes on time: Avoid late payments, as they can trigger an investigation and heavy interest charges.
• Stay up-to-date with tax law changes: Tax laws can be complex and change frequently. Make sure you’re aware of any changes that may affect your business. This is where I can help you. As your accountant, I will ensure that you are compliant with all the relevant tax laws, such as CIS and the reverse VAT scheme for the construction sector.

Remember, the taxman is just doing his job. If you’ve done everything by the book, you should have nothing to worry about. But if you’re feeling a bit anxious, I’m happy to offer you some advice. Sometimes crap does happen to good people.

Additional Tips:

• Don’t panic. It’s easy to get stressed when you’re being investigated, but staying calm is important. Take a minute to sit down with a cuppa and get rid of any anxiousness you’re feeling. You need a calm head for this stuff.
• Be prepared. Have all your documentation ready before the investigation begins. You don’t want to be flapping around trying to find letters or emails; it won’t look good.
• Don’t make any rash decisions. Just take your time; it’s important to consider all the options that are available to you. Take notes to look back on if necessary.
• Seek advice from a professional. A tax advisor or investigations specialist like myself can help you understand your rights and responsibilities and go about them the right way.

By following these tips, you can increase your chances of firstly avoiding a tax investigation in the first place and then getting a successful outcome in a tax investigation.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Running a construction or hospitality business can be a complete and utter nightmare. You’ve got projects piling up, staff to manage, broken equipment and customers who seem to think paying on time is optional. But the biggest headache of all? Cash flow.

I’ve seen it first-hand. I’ve witnessed the stress of a dwindling bank balance and the fear of not being able to make payroll. Trust me, it’s not a fun place to be. But don’t worry, I’m here to help.

I’ve been in the construction industry for decades, and I’ve seen my fair share of ups and downs in my time. I’ve learned a thing or two about managing finances along the way, so I’m going to share my tips with you.

Separate Bank Accounts

First things first, set up separate bank accounts for your business. This will help you keep track of your finances and avoid mixing personal and business expenses. After all, you don’t want your accountant or bookkeeper to see exactly what nice presents you got for your other half. Let’s just say we’ve seen some ‘interesting’ personal expenditure when sorting out year end accounts. 

I recommend using Monzo banking, as they offer this handy feature called “Pots”. You can set aside money for specific things, like tax, rent, or, in my case a pot to fund my golf clubs (which by the way, if you’re not into golf, cost an arm and a leg!). I was recommended to Monzo and wondered what all the fuss was about, but I’ve learned it’s a pretty great app for keeping your finances organised. And, even if digital banking and apps isn’t your thing, it’s pretty easy to use. 

Getting Paid Promptly

Getting customers to pay on time is like trying to score a hat-trick against Man City – tough and often impossible, but there are a few things you can do to improve your chances (that’s with getting paid on time, not scoring against Man City – unless you’re Alan Shearer).

• Send clear and concise invoices: Make sure the details are correct and easy to understand. 
• No surprises: Your billing schedule or the details on the invoice should match what the customer is expecting.
• Set payment terms: Clearly state when you expect payment.
• Put your bank details on the invoice: You’ll be surprised how many invoices we receive where we can’t work out how or where to pay. If your invoice will be paid by direct debit, then state this on the invoice. If you want them to press the ‘pay now’ button, then put this on the invoice. You get the idea!
• Follow up: If a payment is late, don’t be afraid to chase it up. A friendly reminder via email or phone can often do the trick.

Cash Flow Forecasting

A cash flow forecast is a prediction of your future income and expenses. It’s a vital tool for any business, but it’s especially important in the unpredictable world of construction and the seasonally impacted hospitality sector. Projects are great as they are a large lumpy sum of money. But the problem is that projects often come with high upfront costs, i.e. to hire the equipment needed or buy the materials to get started.

Projects can get delayed, costs can shoot up out of nowhere, and we’ve already had a rant in this article, about how slow customers can be when it comes to paying. With a cash flow forecast, you can see these potential problems coming and take steps to avoid them. No more unwelcome surprises. 

Minimising Bad Debts

Bad debts can be another major drain on your cash flow. These are, more often than not, due to the long payment terms involved in construction. Of course, it is possible to have a bad debt with a hospitality business but in my opinion this industry is far better at taking payment either at the point of delivery or before an event. 

Here are a few tips for minimising your bad debts:

• Conduct credit checks: Before doing business with new customers, check their creditworthiness. Don’t just take their word for it. Companies House is a great place to snoop or pay for a credit check.
• Require deposits: Ask for a deposit upfront to reduce your risk. Particularly at the start of a project or before you need to buy materials or ingredients.
• Set clear payment terms: Make sure your terms are fair and reasonable, but don’t leave any room for doubt. I.e. these payment terms should be discussed at the point the contract is signed.

Payment Plans and Instalments

If a customer is struggling to pay, consider offering them a payment plan. This can help you avoid bad debt while still getting paid and it’s more manageable for the customer too, win-win. This option applies more for the construction industry rather than hospitality. Funnily enough we have a few payment plans currently in place for our clients who hit a tough spot trading wise. 

Keeping Your Books Up-to-Date

Keep your books in order. By doing this you can see who owes you money, when payments are due, and if you’re heading for some squeaky-bum time when it comes to your cash or money in your bank account.

I’m a big fan of QuickBooks. It means you can run your business from anywhere in the world as long as you have an internet connection. The QuickBooks software tools let you track your cash flow and keep your business running smoothly. But, the best part is saving time on sending invoices, tracking expenses, and preparing your VAT returns. All of the long, boring admin jobs that often get ‘forgotten’ about.

Splitting Finances by Project

Are you working on multiple projects? Do you know which one of these projects are loss making or the ones that are truly making you money? In my experience many construction companies and hospitality businesses don’t know. Everything gets lumped together on one or two lines of the P&L. 

In order for you to grow and put more money into your bank account you want to know which ones are bringing in the profits and which ones are costing you money. If you are a hospitality business you can do this by splitting the revenue lines on your P&L between items such as takeaway, table service or create reports using software to analyse which of your tempting desserts are working for your customers’ palates and your bank balance.

One of the reasons I like Quickbooks is it makes it easy to split up your expenditure and income on a project by project basis. This means someone like you or I can see very quickly which projects are underperforming and how to quote better next time.

To summarise

Firstly, don’t put your head in the sands when it comes to cashflow. The sooner you have a problem emerging the easier it is to deal with it. We are here to help you whether you are worried about cash flow or whether you know you have a cash flow crisis.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Growing your business is great, but let’s be honest, once you start adding people, office and expensive plant it costs an absolute fortune. We’d all love to be able to just go to the bank and walk back out with a wad of cash. But, unfortunately it’s not as easy as that.

Securing the necessary funds to drive your business growth requires careful planning and strategic financial management. It’s like aiming for a hole-in-one at golf. You need to map out your course, consider the obstacles, and make strategic decisions to achieve a successful outcome. It’s not just about luck or who you know at the bank or finance business.

Understanding the Challenge

Banks, while essential for many businesses, aren’t always the most flexible lenders. They want to see your life story and, what can feel like, your dog’s birth certificate before they give you a penny. But there are ways around it, and failing that, you do have other options.

It’s all about getting your business in shape to impress even the most sceptical lender. Banks are pretty sceptical these days! If you want to increase your chances of securing the funding to help grow your business, you need to be able to present a strong financial profile.

Now, without giving my age away too much, I have to admit I have decades of accounting experience under my belt. So it’s fair to say, I know a thing or two about what lenders look for. I’m going to use that to take you through the necessary steps to become a more appealing applicant to a lender.

Boosting Your Bank Balance

Before we get into the nuts and bolts of financial planning, let’s start with the basics. You need a bit of cash in the bank to look good to lenders.

• Liquidate Assets: Take a look around your site. That old digger or spare bit of land could be worth something. It might not be the most exciting option, but it can certainly help.
• Refinance Plant and Equipment: Refinancing can free up some cash. So, if you’ve got some shiny new equipment sitting around not being used, refinancing is an option. It’s like getting a cash advance on your stuff, but don’t forget, you’ll still owe the money.
• Remortgage Property: If you own any properties, remortgaging can also provide a lump sum. But be careful with this one, the last thing you want to do is lose your home if the business goes through a lean patch.

Preparing Your Business for Lenders

Now, it’s time to get your business looking good for the bank. It’s all about showing them that you know your stuff and you’ve got a solid plan.

• Up-to-Date Books: If your books are messy, it’s time to get them organised. Your books are like a report card for your business. They need to be top-notch. Lenders want to see straight A’s, not a load of red ink.
• Financial Analysis: Break down your numbers. Not only do you need to prove you know your stuff, you’ve got to be able to back it up with evidence.
• Cash Flow Projections: Are you familiar with cash flow forecasting? A solid forecast is essential because you need to show that you can handle the new costs without going under.
• Profit and Revenue Projections: Show your vision for your firm’s future to lenders, they love to see a plan. Be prepared to demonstrate how you intend to make more money down the line.
• Business Plan: A well-structured business plan outlines your goals, strategies, and financial projections. It’s your chance to convince lenders that you’re a safe bet.

Guarantors: A Safety Net

Sometimes, lenders might ask for a guarantor. If this isn’t you personally, this is basically someone who promises to pay back the loan if you can’t. It’s a big ask, so choose wisely.

Make sure to keep in mind that guarantors aren’t philanthropists – they have got to protect their own interests. This means they will probably ask for some form of security, such as a personal guarantee or even a share in your business. It’s important to understand what’s at stake and be aware of all the potential implications before involving a guarantor in your finances.

Beyond the Bank: Alternative Funding Options

There are other options other than banks that you could consider when it comes to financing your growth.

• Government Grants: Free money sounds alright, doesn’t it? Okay, maybe a bit too good to be true, but there might be something out there. Do some research and see what you find. It might be your lucky day!
• Alternative lenders such as Funding Circle: There are more people who will finance a construction project than just the bank. We have a great little black book of contacts who can help you raise money without needing to go cap in hand to the bank.
• Crowdfunding: Get the crowd to raise money and fund your business. It’s sort of like a big pub collection, but usually done online instead. This is not a normal option for construction or property businesses to use to raise finance!
• Venture Capital: Got a high-growth business? These guys might be interested in backing you. But just a heads up, the thing with private equity financing is that they will likely want some form of a return. That means they will want to own a significant slice of your business.

Time to Pay: An alternative source of finance

If you have been diligently putting money aside to pay your corporation or VAT bill, this is money that you can use in your business. You may be able to negotiate a payment plan with HMRC and reroute your cash set aside for tax bills to fund your next project. Don’t get me wrong, it’s not ideal and HMRC can be pretty fickle about whether they will do a payment plan. There’s usually interest involved, so by all means it’s not a free ride. But it could free up the finance you need.

Just make sure to weigh up your options carefully. Although a payment plan is better than digging yourself into a deeper hole, it all depends on your circumstances at the end of the day.

Remember: Every business is different. What works for one might not work for another. Sorry to be the bearer of bad news but copying what somebody else is doing just isn’t going to cut the mustard. That’s why it’s important to get advice tailored specifically to your business.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Running a construction company is not easy. Managing projects, employees and subbies can be a nightmare, not to mention chasing payments. One of the biggest challenges I see is getting hold of the cash needed to keep things moving.

Which brings me on to finance. Now, I know what you’re thinking, “boring”. But stay with me, this could be a game-changer. And I am not exaggerating on this.

One of the biggest hurdles is getting paid on time. You’ve probably experienced those long, painful waits for invoices to be settled. This can put a serious strain on cash flow.

Overcoming Challenges

I’ve known construction firm owners to struggle accessing finance. The problem is these traditional lenders, like banks, don’t understand the industry’s specific needs. This is where specialist lenders and finance brokers can be invaluable. However, when raising finance you need to make sure that your books and accounts are in order. I know, boring, but this is the first thing a specialist lender will want to see before they open a line of credit for you.

Invoice Finance

Invoice finance is where you get paid upfront for work you’ve already done, even if the client hasn’t paid you yet. It’s like having a safety net when those payments are overdue.

Equipment Finance

There are more options than just invoice finance. Equipment finance can be a lifesaver if you need to upgrade your machinery without breaking the bank. And if you’re looking for a bigger lump sum to fund a new project, there are business loans and development finance options out there.

Government Grants

Of course, there’s always the hope of government grants. But let’s be honest, they can be as rare as me going a week without a Chinese.

Construction Supply Chain Finance

Right, let’s talk about this supply chain finance thing. Supply Chain Finance is offered by specialist finance companies. These are businesses that do a lot of financing to construction companies. They pay your invoices to your suppliers and contractors. This means that you can get started on a project before the client pays your first few bills. Sounds alright, doesn’t it?

However, the specialist finance companies will want their pound of flesh. This means you will need to pay them interest on whatever you borrow from them.

Your suppliers get paid faster, and you get a bit more time to pay them back. It’s a win-win, as long as you realise this is not free money and you need to manage it right.

Key Considerations

When considering finance options, it’s essential to weigh up the pros and cons of each. Factors to consider include:

• Cost: Interest rates, fees, and charges
• Repayment terms: How long do you have to repay the loan?
• Security: Do you need to provide collateral? Such as your house!
• Impact on cash flow: How will the finance affect your day-to-day operations?

It’s also worth thinking about the long-term implications of taking on debt. Make sure you have a clear plan for how you’re going to repay the loan.

Getting Professional Advice

Right, let’s touch on getting expert advice. Sometimes you just need a second pair of eyes to sort through the financial mess.

Decent accountants know the ropes. They’ve seen it all before. They can help you figure out what you need, where to get it, and how to pay it back without breaking the bank (and save you the risk of being ripped off).

So, if you’re feeling overwhelmed by it all, don’t be afraid to ask for help. It could be the best decision you make.

A Few Extras to Think About

• Cash flow forecasting: Keep a close eye on your money coming in and going out.
• Risk assessment: Weigh up the pros and cons of different funding options.
• Debt-to-equity ratio: Don’t pile on the debt.
• Government support: Check out what grants or loans are available.

By thinking about these things, you can make better decisions about your business.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Despite what you may think, the CIS scheme exists to ensure that the right amount of tax is paid. It’s not there to make your life hell as a construction business owner. But you would be right in thinking that CIS is complex and highly intricate. As a result, mistakes are often made. Sometimes we can smooth out these mistakes, other times you will need to suck up the penalty and move on.

This blog post explores the 5 frequent errors construction companies make when dealing with the CIS scheme for contractors:

Mistake: Separating allowed and unallowed costs

When you register for CIS as a contractor, you become responsible for verifying the materials your subcontractors claim. The catch? They can only claim for materials directly used in the specific job you hired them for.

Often, subcontractors inadvertently include disallowed materials due to a simple lack of awareness about what qualifies. This might involve adding staff facilities, tools, or even charges for unrelated jobs to your cost sheets. Here’s how to avoid this pitfall:

• Establish clear communication: Before work begins, clearly outline the types of materials covered by the project.
• Review cost sheets regularly: Scrutinise your subcontractors’ invoices and ensure they only include allowed materials. Consider using standardised cost sheets with clear categories. (We can help you with this!)
• Educate your subcontractors: Share information and resources about CIS regulations with your subcontractors. This empowers them to submit accurate claims and avoid complications.

Mistake: not identifying the material source

Construction projects rely on a constant flow of materials, from concrete slabs to bricks to wooden panels to windows. Each material likely originated from a factory or plant that transformed raw materials into usable components.

Here’s where a crucial aspect of CIS comes in – identifying the owner of the material production facility. Sometimes, your subcontractor may own the plant themselves. In other cases, they could be purchasing materials from a third-party supplier.

For CIS purposes, if a third-party supplies the materials, you don’t necessarily need to identify them. However, you do need to indicate that the materials are sourced from an external provider.

Remember, clear communication with your subcontractors is key. Understand the origin of the materials before processing invoices, ensuring accurate reporting to CIS.

Mistake: getting the scope of what is CIS wrong

CIS can appear all-encompassing at first glance, but understanding its limitations is crucial. A common mistake lies in assuming the scheme covers a wider range of jobs than it actually does. After all, you don’t want NOT to put through something which should be CIS.

Before registering, take the time to thoroughly review the CIS terms and conditions. Familiarise yourself with the specific industries and types of work that fall under the scheme’s umbrella. This ensures you accurately classify your subcontractors and avoid unnecessary registrations for ineligible personnel like designers. We can help you with this. In fact, part of our service can include checking over your contracts for CIS.

Mistake: Ensuring all eligible subcontractors are registered

Sometimes, contractors might overlook subcontractor registration because it’s a one off project or just a tiny part of a build. However, if the subcontractor performs construction work, regardless of the duration or scope, registering them under CIS is likely mandatory.

Remember, failing to register eligible subcontractors can lead to financial penalties for your company. This is why at the start of a project have a standard process to identify and register all subcontractors engaged in construction work, irrespective of project size or duration.

Mistake: Muddling up PAYE and CIS

Subcontractors operate as independent businesses providing services to your company.  A common mistake involves incorrectly registering them under PAYE (Pay As You Earn), a tax system designed for employees.

Distinguishing between the two is critical. Working with someone for an extended period can lead to the misconception that they’re an employee. However, in reality, they operate as a separate entity. Misclassifying a subcontractor as an employee can significantly impact your CIS claim.

To avoid this confusion:

• Establish clear contracts: Formal contracts with subcontractors explicitly outline their independent business status and responsibilities.
• Review the CIS guidelines: Refresh your knowledge on the key distinctions between employees and subcontractors.
• Give us a call if you are confused!

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

So, you’re a business owner who wants to see your firm grow profitably and sustainably. But the harsh reality is that growth comes with growing pains.

Even if you’re inundated with work, that cash might not land where you need it. If you are anything like many of our new clients, you’re probably left wondering where it has all gone.

Here’s the thing: without up-to-date books and clear financial insights, you risk cash flow problems that could threaten your whole business. That’s where an accountant comes in handy. After all, I’ve spent the last 30 years supporting people like you to grow and scale their construction and property business.

Master cash flow

Cash is the blood flow of your business. It’s all well and good if you’re turning over millions but if your bank account is empty, who is going to pay your suppliers and employees?

Construction operates differently. You often pay for materials and labour upfront, well before you see any return. Plus, you’ll encounter things like retention and VAT reverse charges (I get it, these are a headache).

That’s why tracking your money in and out is essential. You need to see where your cash is flowing and work out where you might need a bit of extra help or possibly negotiate longer credit terms with your suppliers.

Pricing

Bigger projects are great, but they come with bigger costs. Materials and labour can cost you an arm and a leg these days. That’s why it’s important to include a decent contingency when you price up jobs. You never know when costs for raw materials may suddenly go up. These unexpected changes could eat into your profits and leave you working for free.

You might want to review your costs monthly or for bigger projects have a pricing model to consult before sending out your quote. There comes a point where a ‘back of the envelope’ or ‘finger in the air’ quotation could bear no relation to the actual costs of running the job. This could be a painful lesson!

Expenses

Higher turnover means higher expenses, which include managing a growing number of invoices. Juggling suppliers, credit card statements, and cash purchases can become a really complex task. To the point where if you are still using your other half to run the office for you, you need to get in a professional to manage it all. Hint: We can help you with this! 

But, you’ve got to be careful these things don’t slip through the cracks. The last thing you want, is to be dealing with difficult supplier relationships or left wondering where the profit of your last job has got to. Particularly if that profit was going to fund the start-up costs of your next project!

Employees, subcontractors or both?

As more work comes in, you might think about hiring more employees or using subcontractors. Both have their pros and cons:

Building your own team of employees lets you train them to your standards. Top quality, but remember, they come with the full package: holiday pay, sick leave, the whole lot.

Subcontractors are a good choice for short-term projects, but you’re at risk of misalignment of values. Or them disappearing onto another job which pays better.

One of the things I can do with you is help you decide what is better for you, more subcontractors or more employees? 

Annual budget

You will want to keep track of your estimated income and expenditures for the year ahead. A good way to do this is to monitor it as you go, so you’ve got something to look back on. It helps you see upcoming challenges and opportunities before they hit. Plus, a lot can happen in three months in the construction world. We mostly use Quickbooks with our construction clients to make it easy to see what money is going where.

Ever got behind the wheel blindfolded? You wouldn’t do it, would you? Not having a set budget is the same sort of thing; you’ll either end up lost or in debt.

Accountants are your right-hand men. We help you build budgets that fit your growth plans. Then, all it takes is a check-in every now and then, helping you keep your head above water.

Running a construction business can be grinding, but anything worth doing is never straightforward.

To summarise

• Prepare for what’s in the pipeline with cash flow forecasting
• Price for uncertainty – make allowances for disruptions
• Keep on top of your processing and expenses
• Weigh up pros and cons of employees and subcontractors
• Track your growth progress against an annual budget and identify problems and opportunities before the moment has past

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

I’ve been around for a few years. In my opinion there is nothing worse than talking to a prospect whose business and mental health is in a pickle because they trusted their accountant to do their stuff once a year.  That’s where a decent accountant comes in. If you get a good one (and pay for the right service level), they should be working with you to, keep you out of trouble and save you a bob or two along the way. But picking the right one can be a right palaver. After all, so many of them sound the same. So here’s what to look out for:

Experience

You wouldn’t let some bloke in the pub operate on you, would you? Same with your business. Don’t get some backstreet bookkeeper fiddling with your finances. Make sure they’ve got the proper certificates and licenses, alright? A good way to check is look for institute and software logos on their website.

Are they qualified through one of the main accountancy bodies (the ACCA, ICAS or CIMA)? What is their speciality and what industry experience do they have? Whatever your specific requirements are, make sure that they have the experience and the kind of services that you need. (E.g. goal setting, tax planning or cash forecasting as well as compliance services).

Fixed Fee Basis

The next factor to consider when choosing an accountant is money! There are still some traditional accountants out there, who charge by the hour, like a meter on a cab. Others do a set price, no matter how much you bend their ear. By the way, we charge a fixed fee as we know our clients like certainty around what it will cost.

Accessibility & Proactiveness

The most common complaint about accountants is the disappearing act. Don’t get me wrong, they’ll be reminding you to send in your documents when your self-assessment tax return is due. Some may bill you a fortune to do nothing more than pop some numbers in their software. Then vanish again for another 9 months. Think of a decent accountant as financial partner, critical friend and the voice of sanity. After all, there isn’t much I haven’t seen in 30 years of working with construction and property company owners.

A good accountants should help you navigate those pesky growing pains, and keep your business on the straight and narrow, all year round. Not just when the taxman comes knocking! Or when that nasty unexpected brown envelope arrives.

When choosing an accountant, check their accessibility (referrals and reference checks is a good way to see whether you’re likely to be fobbed off to a junior). It’s also handy to see how proactive they are (e.g. suggesting ways to save you money and offering to introduce you to good contacts) all year round.

Personal Connection

You’ve got to feel alright with them. Like chatting with a mate down the pub. If explaining your business feels easy, that’s good. For example, we don’t make any judgement if a client turns up from a busy day on site with their dirty work clothes still on. Or if the air gets turned somewhat blue while we are talking.

You and your accountant will need to be a team. So find someone who gets your vision and what you are about, not some youngster with a laptop covered in stickers.

An accountant is a great investment

Whether you’ve been trading for a while or new into business, a decent accountant is worth their weight in gold. They’ll be your financial sidekick (sorry cheesy!), sorting the numbers and giving you the right advice. The sooner you get a good one on your team, the better. But remember, choose wisely, alright? Like finding the perfect partner for a game of darts – you have to be on the same wavelength!

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb

Self-employment can be tempting, especially if you’re fed up chasing the weekend or longing to be your own gaffer. Before you chuck in the towel at your day job and daydream about all the time you’ll have for brew breaks (because let’s be honest, that’ll be replaced with a different kind of hectic), take a good, long look at yourself. Self-employment is not for wimps or those who are work-shy – despite what you may think about the gaffer. If you are going to put food on the table and take your missus to a nice place for her holidays, you are going to have to work hard and handle pressure.

So, grab a cuppa, stick your thinking cap on, and answer these questions truthfully:

*Answer each question with a Yes or No*

1) Are you confident in your skills and expertise?

2) Do you have skills and passion for the business you’re considering?

3) Do you enjoy working alone?

4) Got the knack of prioritising tasks like a pro?

5) Got the get-up-and-go to crack on without someone cracking the whip?

6) Up for wearing all the hats – marketing, sales, the whole lot?

7) Sharp enough to pick up new tricks quickly?

8) Got the initiative to chase new ideas?

9) Can you single-handedly make the call when the going gets tough?

10) Are you able to pick yourself up, dust yourself off and problem solve in tricky situations?

11) Do you have the knowledge and skills to make your own product or service?

12) Do you know how to promote yourself so that others will buy from you?

13)  Happy to build potential connections in the business world?

14) Thick-skinned enough to handle a bit of a pay cut while you get your business off the ground?

15) Are you willing and prepared to put in long hours of graft at the start?

16) Have you given the family the heads up on the potential impact at home?

17) Can you live with high levels of uncertainty?

18) Can you take a knock and keep on ticking?

19) Good at turning a penny into a pound?

20) Are you a dab hand at setting goals and smashing them?

Give yourself a point for every Yes answer and give yourself a mark out of 20. If you scored 16-20, self-employment will be a walk in the park for you!

If you answered “no” or “maybe” to a lot of the questions, self-employment might not be your cup of tea right now. You may need to do some thinking and soul searching before you take the plunge.

____________________________

By no means is this self-employment quiz the decider for whether you choose to run your own business or not. However, it is based on the qualities, skills, and traits you will need to become a successful business owner! Even if your ambition level is to “only” work with yourself with a few subbies helping you out on jobs.

If you want to go for it and become self-employed, look at where your ‘No’ answers are. If you know you’re not a dab hand with money, consider getting an accountant or bookkeeper as early as possible.

Interested to find out more?

Call us on 01617 985789

Or book a meeting at https://calendly.com/d/ckfd-tzk-zbb