In this two-part article, a Birmingham contractor attorney is discussing one of the most overlooked aspects of a construction business: when contractors fail to properly track their cash flow. Your construction company may provide quality service and deliver effective results on time; however, if you fail to assess your profitability and loss accurately on projects, your business will be affected.
In the first part, we discussed construction firms that fail to properly calculate the profitability of projects during the bid process. In this part, we will discuss two other ways that construction firms fail because of their poor management of finances. Remember, at Cotney Construction Law, Birmingham contractor attorneys can help you manage more than just the legal aspects of your business. To reduce risk and save money, learn about our subscription plans today.
An Accounting System that Features Tax Saving Strategies
Many contractors prefer a hands-off approach to the fiscal side of managing their business. Whether your business has a full-time accountant, bookkeeper, or this task is outsourced periodically, the end result is that the contractor is not weighing in on a crucial aspect of their business. If the professionals on the jobsite aren’t directly involved in the accounting process, many financial decisions made on behalf of the company do not have the input of a construction specialist. Whether you need to improve the financial side of your project-by-project tracking or you’re not utilizing effective tax-saving strategies, it’s time you change your approach and consult a construction tax attorney that can help you save money.
Buying, Renting, or Leasing Equipment
Contractors have to always consider ways they can save money on projects in order to keep cash flow freed up. One everlasting debate is whether your business should buy or lease construction equipment for projects. Of course, deciding which option is right for your operations has to be performed on a case-by-case basis. Renting can provide flexibility, considering that the equipment will be delivered to the jobsite and used for the project and then hauled off. In other words, you don’t need to store it anywhere long-term, nor do you need to pay for repairs. Another perk is that you can try the equipment out and see if you like it before investing significant capital. Of course, if you regularly use the equipment, buying can be a more cost-effective solution; however, it will impact your current cash flow. Leasing is another option that allows a company to rent the equipment for a longer duration at a lower rate, so that may be the right compromise. Regardless of what decision is right for your company, contractors need to consider equipment cost control strategies for all of their projects.
Whether it’s structuring a construction business transaction, placing effective bids on projects, providing an aggressive bid protest, or seeking tax advice, consult an experienced construction law attorney.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.