Proper bookkeeping is one of the pillars of a successful remodeling company. But numbers, despite being a good indicator of whether or not you're doing well, can also be hiding the truth. Over at Remodeler's Advantage, Judith Miller examines how some best practices can help keep the numbers honest:

In each case there was a “NON best practice” in play which produced much of the wild swings:

  • Posting backward after the O/U journal entry had been made;
  • Estimated labor costs not equal or even close to actual labor costs;
  • Incorrect WIP at the end of prior year;
  • Numbers used on spreadsheet to calculate O/U not tied to accounting data;
  • Incorrect calculation of estimated cost to complete;
  • Posting of job costs not in the month in which the work was done.

Remodeler's Advantage offered up two possible solutions to help their readers maintain those best practices, a Margin Variability Chart, and a Golden Triangle Chart. Click on the link below to read the full story and get downloads for each chart and explanations on how to best use them.

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