The purpose of this article is to discuss construction liens (also known as mechanics' liens) and how construction accounting is a vital component in reducing the risk of not getting paid for labor or materials expended on construction projects. However, before delving into that discussion, we must first address an essential aspect of dealing with the legal side of construction liens. While, when followed correctly, lien laws create a legal claim on the property’s title, ther

Adjusting the Flow For healthy and profitable construction businesses, it comes down to adjusting the flow of cash effectively. That means that construction accounting is the groundwork for establishing stability, security, and confidence for contractors.   The key to adjusting the cash flow in construction is to recognize some fundamental elements that come into play at various stages – they are:   Revenue Recognition Progress Billing Job Cost Tracking Work in Progress (WIP)

Running With the Big Dogs When operating your construction business, there comes a time when you must choose; you can Run With the Big Dogs , or you can dog along running .  Construction accounting is the pivot point. No matter how good you are at the hard skills of your trade or the soft skills necessary to own a business, your numbers (the accounting) are the foundation for building your construction company. Dealing with those numbers can be either a hassle and hindrance o

Minding Your Money Tree When money trees are small, they are easy to care for with a watering can. As they mature, it will be easier to use a garden hose. Then comes the time when watering the money tree requires a full-blown irrigation system that accounts for correct timing, accurate measurements, and appropriate filtering mechanisms.  The same is true for many whose “money tree” is the construction business they own. They typically start out small, watering by hand, and th

Debt Feels Like an Easy Solution – But It’s Not! Got a cut on your hand? Clean it up, put on a bandage, and go about your day. But...

Site Preparation for Construction Project Estimates Project estimate  – a detailed prediction of the total cost to complete a...

It’s Here! On November 11th, we announced the Construction Junction podcast was coming soon. Well, soon has arrived. Today, Wednesday,...