Auditing a Few More Things
In the first part of this 4-part series concerning auditing expenses in your construction business, I suggested you harness the power of your inner detective so you can find the evidence and solve the problems you encounter in your financial records. Then, in the second part, the focus was on Auditing Employee Expenses through the lens of Private Detective Sherlock Holmes. In the third part, the spotlight was on Auditing Insurance Policies with the assistance of Miss Marple.
In this fourth and final post of the series, we’ll bring in police detective Columbo to deal with “just a few more things.”
If you recall, when you heard Columbo say, “Just one more thing . . .” you knew he was about to crack the case wide open and fit in the final pieces.
Auditing Unused Recurring Charges
Everything from the components of your tech stack to construction-related magazines can be based on recurring charges. Columbo would notice that the keyword in the subheading above is unused. You may receive bills for services and products repeatedly, but not all are used regularly.
When auditing for recurring charges, important matters Columbo would consider are:
How much you pay
When they expire
Who in your business uses them
How they are used
Where they fit into your business process
When asked about dealing with unused recurring charges, Leslie King said, “When auditing our client’s books, I generally check the following expense accounts and make a list of recurring charges to review with the client.
Dues and subscriptions,
Education expenses,
Computer software.”
Assess recurring charge value by considering how often you use these services or products and the quality of what is provided.
Regular audits can keep you on top of the problem of unused recurring charges. Be proactive, make informed decisions, and realize that as your construction business grows, so do your needs for various services or products. Chunk what you no longer need or use.
Auditing Overly Expensive Corporate Service Plans
Leslie tells us, “Construction business owners should review the cost for any plans at least quarterly. They need to evaluate whether the benefits are worth the price. Contractors need to review equipment maintenance contracts, the cost of their payroll service, and IT service contracts. For example, they may find that they’re paying a monthly fee of $50 for printer maintenance when purchasing a new printer would be less expensive.
Auditing Other Expenses
Leslie says, “As part of our month-end close, I run a profit and loss by month (showing multiple months side-by-side) and review each expense account. I’m looking for any fluctuations from month to month. This is a good way to check for anything that may have increased, such as insurance, dues, software subscriptions, and utilities. It’s also an excellent way to spot overspending in areas like meals, entertainment, and office supplies.”
She adds, “I had a client who had their water bill on auto pay and never really reviewed it. By doing this monthly review, I found that their water bill had increased by $300 in one month. After alerting the owner, they discovered a severe exterior water leak at their office building that they were unaware of.”
More About Auditing
Another team member, Debra Brown, had this to say about auditing. “Because one of the Core Values at The Profit Constructors is Always Be Reconciling, the aim is to be checking the history of reoccurring transactions for consistency and to make sure there isn’t anything out of the norm like an increase in price, additional billing, duplicate transactions, and so on.”
Debra adds, “So, essentially, we are ‘auditing’ this kind of transaction each month. This also applies to non-recurring expenses. If we have questions about a transaction or to ensure it isn’t a duplicate, we check the vendor history to learn more about the transaction we are working on. If something is unusual or we have questions, we ask the client for more information or backup. At other times, we bring something like price increases, new recurring transactions, and those sorts of things to their attention.”
“Just One More Thing . . .”
Making auditing expenses a regular and ongoing part of your processes will allow you to bring out your inner detective and set your path for finding the evidence and solving the mysteries of your financial dealings.
Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Governmental entities
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Remain informed
Avoid hassles
Reduce risks
Be future-ready
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735