Keeping on top of your finances is the key to running a successful business – even more so in the construction industry where good cash flow is such a vital part of delivering a job and making a profit.
So, what are the big financial challenges you face as a construction business? And how can Bespoke help you overcome these potential hurdles?
Let's start at the beginning of the process and see how a cloud software approach can help your construction business keep on top of those finances.
Quotes and costing jobs
The starting point for a new job is likely to be a quote. This is your chance to outline the scope of the job, agree the fee and make it clear where extra costs would be incurred for additional work.
By calculating your material costs, working out the required labour and agreeing on the final fee you're one step closer to getting paid – and getting paid quickly will be a lot easier with a clear agreement on the cost of the work to the customer.
At Bespoke, we're big fans of Xero's cloud accounting software as a finance platform for your construction business. And Xero lets you create and send your quotes directly from your software to the customer via email – so it's quick and painless to do.
And don't forget, timing is important: the company that quotes first may well be the company that makes the sale.
Costs, overheads and project management
Once you've won the job, you need to deliver the job. That means taking on subcontractors, paying them and buying the raw supplies and materials needed for the job – and that all requires ready cash.
Keeping track of the money you spend on labour and materials is the foundation for good financial management in this industry. So having tools that let you do this more effectively can have a real impact.
Xero's dashboard and reporting functions give you a clear overview of the:
- Money you've spent,
- Balance you have in the bank,
- Invoices you have outstanding, and the Current state of your cash flow.
Xero also has a growing community of third-party plug-ins (Xero Add-ons) aimed specifically at the construction sector [link back to the Construction landing page]. Project management Add-ons like simPRO and Workflow Max let you manage every aspect of the job from start to finish.
You can see how much time you've spent, how much you've spent on materials and make sure you stick to your timelines and budgeted costs. It makes project managing the job a breeze, and all your numbers are automatically pulled into Xero – so your balances are totally up to date.
Invoicing and getting paid
So you've finished the job. Now you need to get paid. And the quicker you can raise your invoices and get them in front of the customer, the quicker you'll get paid.
Xero is totally mobile and works from your smartphone or your tablet. And that mobility, paired with Xero's online invoicing, has a number of benefits:
Online invoicing means:
- No need for a paper invoice.
- No delays with posting out a hard copy to the customer.
- Invoices can be raised before you've even left the customer.
- Customers get an email with a link directly to the online invoice.
- They can pay directly online with one click.
And if that isn't quick enough, there are plenty of Xero Add-ons for setting up direct debit payment and debtor tracking plug-ins that will automatically chase any customers who are late with their payments.
Remember, the sooner that customer pays their bill, the sooner you have the cash flow you need to finance the next job. So fast invoicing and payment can have a significant impact on your finances.
Performance, reporting and financial health
When you're making big decisions about the running of the business, you need to have the best possible overview of your financial information. And cloud accounting has the major advantage of showing you your numbers in real time.
- Xero's dashboard and reporting functions give you a completely up-to-date view of your financial position.
- You're no longer looking at reports that are weeks, or sometimes months, out of date.
- You're looking at your balances as they are right now – and that means you can make properly informed financial decisions.
There's a big choice of reporting and financial intelligence Xero Add-ons. Solutions like CrunchBoards, Spotlight Reporting and Float add new depth and functionality to your reporting, cash flow and profit forecasting and future spending plans. So you can dig as deeply as you need to into those figures.
An informed overview of your finances
So, as you can see, making the move to a cloud accounting platform really does improve your overview of the business's finances.
Being able to see those numbers in real-time, having faster, more efficient invoicing and a better view of your cash flow and spending will really help to drive the business forward.