Builders as much as bakers need to know where the money is coming from and where it is going. If you are to run a construction company, you must have accounting systems for recording and analyzing your income and expenses in an organized way. Only then will you be able to understand your company’s financial performance and get it up to par.
Unfortunately, many builders neglect or avoid their accounting responsibilities. During their start-up years, some simply do not yet grasp the importance of accounting as a tool for managing their business and do not give the task the priority it deserves.
More seasoned builders, while glimpsing the truth that accounting is integral to business management, pass the task off to others. “The wife takes care of that,” they say. Or they declare, “As a builder you are much better off doing what you know how to do out in the field and leaving the accounting stuff to the experts.”
That last rationalization is mouthed even by self-appointed construction industry educators. You can hand off the bookkeeping – namely, the clerical work of recording and totaling your income and expenses, but you must still understand your accounting system and what must go into it in order to get the needed output. You need to be involved in setting it up and in developing it. And you must pay attention to and analyze the summaries of income and expenses it produces. You must pay attention to and analyze the summaries of income and expenses it produces.
The idea that you can be in business but oblivious to accounting is like thinking you can sail across the ocean without using navigational instruments. Try it and you will end up in a financial shipwreck.
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- Barbara J. Jackson, Construction Management Jumpstart
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