Many parallels can be drawn between designing and building a successful project and designing and building a successful financial system. All too often, however, results of the remodel project are far more satisfactory.

The Design/Build Remodel Project

Each partner in the process makes specific contributions for the successful completion of the project. 

  • The homeowner’s job is to provide clearly-stated requirements and preferences.
  • The architect/designer‘s job is to create a plan that will meet these requirements and preferences while adhering to structural and other code rules. Another task is to educate the homeowner to the opportunities made possible by new products and techniques.
  • The remodeler’s job is to implement the plan with efficiency and accuracy.

In a design/build firm, there may be only two partners in the process (homeowner/remodeler) but all the contributions are still necessary.
The Financial System

The creation of an effective financial system for a remodeling company requires a similar partnership, but all too often, the process fails. Why?

  • The business owner’s job is to provide clearly-stated requirements and preferences for financial and job cost reporting. 

The challenge is that many remodelers are excellent technicians but lack experience in the business side of things. This means they may not know what they need to know, may not know what is possible within their software, or may not have the ability to convey their wishes in “accountant-speak.”

  • Somebody is responsible for creating a financial system that will meet these requirements and preferences while adhering to standard construction accounting practices and tax rules.

The challenge is that many remodelers rely on their tax accountant to set up their systems, but tax accountants are focused not on how the business owner needs to use the system for managing the business on a day-to-day basis, but on how they will use it for preparing taxes at the end of the year.

  • The bookkeeper’s job is to implement the financial system by entering data with efficiency and accuracy. 

The challenge is that most construction companies do not have written procedures for their financial system and, as bookkeepers come and go, consistency and continuity are lost. This is equivalent to destroying the plans for a project and then swapping out the construction crew halfway through the project.

As a result, the financial system often leaves much to be desired, failing to meet the needs of the business owner and displaying inconsistencies and bad data.

The Solution

Bear in mind the importance of the initial design process. Work with somebody who can competently fulfill the role of architect/designer by:

1.       Specializing in construction accounting and financial management

2.       Interviewing you to determine your specific reporting needs and wishes

3.       Having experience with appropriate software and other tools

4.       Providing training in data entry to produce the desired results

Such a person might come in the form of a construction accountant or a consultant, but whoever you choose should be someone you can trust, learn from, and plan to partner with. Once the financial system is in place, invest in continuity and consistency by documenting standard practices. Then you too may be able to celebrate an enduring result that meets your requirements!