Getting all the information that you need – from the people that you need it from; and then getting it all organized and into your accounting software – is one of the biggest challenges found in any office.
Even if you have the latest computer hardware, one of the new versions of QuickBooks (or whatever accounting program that you use), you still might not have all the data that you need.
Why, you ask, because to get the most functionality from your computer and software, you need to have an organized flow of information from the field, to the office, and finally, to you and your computer system. You may need to study – and perhaps change, the way you do things.
For example, let’s say that you want to accurately record the number of hours that your companies employees are working on each job — that’s a great goal — but what if you are only getting half of the information that you need each week from the field? You end up only half accurate job costing reports.
Office and paperwork flow should follow a strict process, whether you work alone or have office help, if you don’t have that strict process, you will find yourself spending many hours each week (day) shuffling papers. The best way to get a process going is to get everyone involved — and in some cases, you need to make it sound like you are doing them a favor; instead of doing yourself one – although, this is very hard to do if it’s only you!
The best way to establish a new routine or procedure is to get EVERYONE involved. In our opinion – and I’ve found it to be true time and time again – the more informed you keep the people who are actually doing the work, the more effective they will be. For example:
Job cost information needs to make a complete circle so the people creating it get feedback on how and what they are doing. Show your project managers a job cost report each week, chances are, if they understand HOW you are using the data that they give you, they will more likely make sure that you get it. Another good report to run on a weekly basis is the Job Estimate vs. Actual Detail, it shows the job – broken out by line item 0 with actual cost, estimated costs, and the variance. These numbers will help to evaluate where the job is running over or under the estimated costs, while you can still do something about it, in most cases.
Another big challenge in a construction office is keeping the job files current. An efficient and effective filing system is mandatory. Organizing your files like QuickBooks organizes it’s lists makes the most sense.
Customer Job Files:
If you have a large contract with your customer — and many people need access to the information – a 3-ring binder and dividers are very useful. If your jobs are smaller, a classification folder will work in the same manner as the binder. Use the dividers to organize correspondence, original project contract, copies of billings, copies of certified payroll reports, copies of change orders, or extra work orders. This allows for easy maintenance as new billing, certified payroll reports, and work orders, are generated.
Vendor Files:
It isn’t necessary to give each vendor their own file – create folders or use box-bottom folders for vendors that you do large amounts of business with, regular folders will suffice for others, and a Misc A-L and Misc. M-Z are great for those vendors that you use only occasionally.
Employee & Payroll Information:
It is recommended that certain employee information be kept in a locked file drawer, thus ensuring that confidential information regarding each employee is not accessible to anyone who walks into the office. This drawer can be set up with each employee having a folder of their own, and should include the following information:
- a completed employment application and resume
- a completed Form I-9 with a photocopy of their driver’s license, social security card, and perhaps even their insurance card
- completed Federal and State W-4 forms
- relevant Union information
- copies of wage garnishments, child support orders, payroll deduction authorizations
- payroll wage information
Weekly payroll information should be handled a little differently; but still filed securely. Setup up folders for weekly payroll information if you have a large number of employees, (monthly folders if you only have a few employees). Each week, when you have completed your payroll, take the weekly time cards (or daily ones) that you received from the field, a generated Payroll Summary Report, and the paycheck voucher, for your records – staple all of these items together and file them in a folder. Also, file here a copy of any certified payroll reports, if you are required to generate them.
Keeping Paperwork Current:
Getting the paperwork from the field to the office is the important thing, and many times this may involve teaching your key field people, what, when, how, and where; you want them to get this information to you. Don’t get discouraged – this may take awhile, and you may need to get creative, but make it easy for them.
Provide them with forms and teach them how to fill them out with the information that you need. Provide them with a place in the office with an in-basket to put completed paperwork and folders where they can pick up additional blank forms.
You may even want to go so far as to purchase inexpensive fax machines for your crew supervisors to have at their home, if you require them to submit daily time sheets, reimburse them for phone charges if its a long distance call. This will alleviate the need to make a trip to the office on a daily basis, and you will have the information that you need to stay on top of things.
It’s FREEBIE FRIDAY!!!! And it’s time to get all those bookkeeping & accounting tasks organized!
Do you have a mountain of bookkeeping and accounting paperwork on your desk that needs to be organized?
Does your monitor looks like someone made a post-it note frame for it, with all your little “reminders”?
Maybe you’ve just started a new bookkeeping job and are wondering how on earth you are ever going to remember when everything is due.
Relax, we’ll get that mountain of paperwork and due dates under control!
We’ve compiled a list of daily, weekly, monthly, quarterly, and annual bookkeeping and accounting tasks to help you stay on track.
This list is geared for contractors and include items such as certified payroll reports, billing draws, Worker’s Comp, and General Liability Insurance tracking reminders.
Best of all, it’s in Excel 2003 format, so you can easily add other items that you need to keep track of.
Download your free copy of our Bookkeeping & Accounting Tasks Schedule right now, by clicking here.
A contractor’s work is tangible; it’s seen, touched, heard, smelled, and judged good or bad. Bookkeeping is intangible. Paperwork given to The “Keeper of the Books” is input into the “Black Box” and reports come out, eventually, someday.
Ideally, these reports tell contractors how much money they made or lost and where it all went. If the reports from Black Box match the bank’s records, the suppliers unpaid bills, and money their customers owe them then the Black Box has value.
However, in most cases Black Box reports do not agree with everyone else’s records the contractor becomes angry and distrustful because he is not in control of the Black Box.
The Keeper of the Books is in control of the Black Box and the reports it can generate which means they have the power to provide them or withhold them depending on a variety of circumstances, including their mood at that moment.
The Keeper of the Books also has the power to decide what reports are “needed” and therefore “possible” and which ones they have decided are not “needed” and are therefore “impossible” to generate.
Sometimes they tend to guard the reports and not provide them to the contractor because they know they are not accurate.
Eventually the contractor realizes his finances are in chaos so fear, masked in false bravado and manifesting as anger begins to take hold as the primeval “Fight or Flight” response kicks in and the blame game starts.
The contractor verbally attacks the Keeper of the Books saying, “Bookkeeping is only a few keystrokes, how hard can it be? I should be able to push a button and get the reports I need and they should be accurate. What is wrong with you?”
The Keeper of the Books will commonly reply with something to the effect of “When you start bringing me ALL the paperwork you will have your reports!”
After a while, the discussion ends with everyone losing faith and trust in each other and the Black Box accounting system.
The answer is to setup the accounting system similar to the dashboard on their truck or van. The dashboard has Five Key Performance Indicators:
- Speedometer
- Tachometer
- Fuel Gauge
- Oil Temperature
- Water Temperature
The contractor surveys these Five Key Performance Indicators, reflects on past decisions and the outcomes that occurred; the effect that preceded the cause; running out of fuel meant wasting time. Based on the reports (gauges) the contractor makes decisions and takes action.
Setup the accounting system to make the Black Box operate like a dashboard by putting the reports where the contractor can easily and quickly access them with a few mouse clicks to display the Five Key Performance Indicators for their company:
- Cash on Hand (Cash is a fact & Profit is an opinion)
- Accounts Receivable (Cash coming in)
- Accounts Payable (Cash going out)
- Balance Sheet (The 3 “0’s” “Owned” - “Owed” = left “Over”)
- Profit & Loss (The opinion and accuracy depends on Bookkeeper)
A tremendous amount of the STD’s (Stress, Terror, Drama) in construction accounting can be resolved with a properly setup and maintained accounting system.
Thousands of accounting software programs for construction accounting exist and none of them work well out of the box. Every one of them have to be setup and customized to each individual business for the contractor to get good value from it.
Small businesses are particularly vulnerable to theft simply because they don’t have the resources or security controls in place to stop them.
Employee theft is extremely common; unfortunately, we hear about it or read about it in the newspapers all of the time.
While it is fair to say, most people don’t steal, embezzlement does happen; so it only makes good business sense for you to consider what you can do to minimize your employees’ opportunities to steal.
Below are some general internal procedures that many business owners who use QuickBooks can implement quite easily.
Who should be the QuickBooks Administrator? As the business owner, you should create the QuickBooks Admin account and password and be the Administrator for your own QuickBooks company data file. All too often we have seen or heard from many business owners that their CPA or QuickBooks ProAdvisor is the Administrator of their QuickBooks file and that they don’t even know what the Admin password to their own data file is; quite frankly we do not agree with this practice. Your books are YOUR books, just like your business is your business. You should not give that kind of control to anyone.
We have heard of instances where the business owner and the CPA/ProAdvisor has had a “falling out” and the business owner cannot perform even the simplest of Administrator functions because they do not know the Administrator password and the former CPA/ProAdvisor will not tell them what that password is. This results in the business owner having to pay for password retrieval.
Set Up the External Accountant User. QuickBooks 2009 and newer has the ability to create an External Accountant User. Create two different External Accountant Users, one that is actually for your accountant and one that is for you. Learn how to use the Client Data Review tool to monitor what is going on in your QuickBooks file when you aren’t there to see.
Who should know the Administrator password? Your CPA/ProAdvisor or in-house bookkeeper should know what the Administrator password is; otherwise you could be pulled off the jobsite to perform menial tasks.
The Administrator Account should NOT be used when entering daily transactions. The Administrator account is a special purpose user account and should be treated as such.
Each QuickBooks user should have their own QuickBooks user login account. As the QuickBooks Administrator you should create a user account for each person who will have access to your company data file, this includes a user account for yourself which you will use when entering transactions. When you create user accounts you are the one who controls who can access what information.
A word of caution for Enterprise users, the permission setting in the Enterprise version are much tighter than in Pro or Premier and you do need to be careful when setting up user permissions or you can effectively prevent an employee from performing the tasks that you do want them to be responsible for.
When should the Administrator Account be used? We recommend that you use the Administrator login account when reconciling the monthly checking and credit card accounts; and then on an “as needed” basis, as there are times when it is required that you, your CPA, or bookkeeper must be logged into QuickBooks in single-user mode as the QuickBooks administrator – such as changing companywide preferences in QuickBooks or granting permission for a third-party application to access your QuickBooks company data file.
Set closing dates and use the Closing Date Exception Report. On a monthly or quarterly basis, after you have reconciled the bank and credit card statements or after the quarterly payroll tax reports have been completed; set a closing date with a password; closing dates are found from the Edit menu -> Preferences -> Accounting -> Company Preferences tab. This will prevent accidental or unauthorized changes to previously reconciled transactions, because only those people who know the password will be allowed to make changes, and get them into the habit of using the memo field to indicate why a cleared transaction was changed. You can then run a Closing Date Exception Report, found from the Reports menu -> Accountant & Taxes -> Closing Date Exception Report.
Monitor Accounts Receivable Reports. Implement a procedure that by a specified time on Friday that you receive an Open Invoice Report, found from the Reports menu -> Customers & Receivables -> Open Invoices. You should review this report and then leave it for your mailroom clerk for Monday morning, so that she can make notes of payments received during the week and return it to you after mail time on Friday. You can then compare the previous week’s report to the current weeks report for any discrepancies. For example, the mail clerk indicates that payment for Invoice number 1001 was received on Tuesday, but the current Open Invoice Report shows that it is still outstanding.
Monitor your Accounts Payable Reports. Don’t leave it up to someone else to decide which bills get paid and which ones will be delayed….you could be in for an unpleasant surprise!
How often does your company pay its bills – weekly, bi-weekly, monthly? Implement a procedure in which you receive an Unpaid Bills Detail Report, found from the Reports menu -> Vendors & Payables -> Unpaid Bills Detail by a specified time on a certain day of the week with the current bank balance indicated.
Review the report and YOU decide who gets paid and who doesn’t; maybe even make a few phone calls if cash flow is tight. The day before it’s time to pay the bills, ask for the current bank balance and make any necessary adjustments. Leave this marked up report for your Accounts Payable clerk for the morning that they are to cut the checks. Keep in mind that taking advantage of early payment discounts could help pay for other upcoming bills.
Third Party Tools – Check out AuditMyBooks, a QuickBooks 3rd party tool, which double-checks your accounting records for problems.
The suggestions contained in this article are not designed to turn you, the business owner, into an untrusting boss but rather are suggestions to help you maintain control of your business and its financial affairs.
As a busy business owner it is quite easy to fall into the bad habit of simply turning over your business’s accounting to someone else; because your time is best spent in the field and not in the office doing paperwork. Not only is this a bad habit, it can also become a dangerous situation.
In the course of my bookkeeping career, now over 30 years, I’ve seen many instances of employee theft – from the simple act of people taking home office supplies in the fall for their children, employees giving themselves unauthorized raises, bookkeepers embezzling money from the business, accountants “cooking the books”, and even family members “making a mess of things”.
Whether it’s theft of money, supplies, inventory, equipment, or intellectual property, nearly every small business will experience some type of employee theft or embezzlement at one time or another.
Small businesses are particularly vulnerable to theft simply because they don’t have the resources or security controls in place to stop them.
Employee theft is extremely common; unfortunately, we hear about it or read about it in the newspapers all of the time.
While it is fair to say, most people don’t steal, embezzlement does happen; so it only makes good business sense for you to consider what you can do to minimize your employees’ opportunities to steal.
Here are some simple ideas you can use to reduce your chances of becoming a victim.
Protecting Your Business from Embezzlement
Fortunately, there are easy ways to minimize the opportunity for embezzlement at your company. Here are some steps you can take to protect your business’s assets:
1. Do a background check before hiring someone to be an employee. A person with a criminal background of theft or a problematic financial past might be tempted to take resources from your business. It’s a good idea to be informed about the person you’re hiring before you hire them.
2. Keep track of your company’s checks. Purchase and use pre-numbered checks and periodically check for missing check numbers by using the QuickBooks Missing Checks report; available by going to the Reports menu -> Banking -> Missing Checks.
Have a written “voided check” procedure that requires all voided checks to be coded to an Expense Account called “Voided Checks” and use the memo field to record the reason the check was voided; for example, printer jam. Periodically generate a Quick Report for this account to see what checks have been voided and why; create a Quick Report by going to the Lists menu -> Chart of Accounts -> scroll down to the Voided Checks account, click to select it -> click the Reports button -> choose Quick Report.
Our best advice is to Never, NEVER sign a blank check, don’t leave a signature stamp laying around, and don’t insert a graphic of your signature to be printed on each and every check that your business generates.
3. Sign and verify all checks, especially payroll checks. It’s a good idea to sign all checks-even small ones-yourself. This can be a lot of work, but you can have an employee prepare the checks for your review and signature.
Not reviewing and verifying checks before you sign them is like signing your bank account over to anybody who wants the money (and that could be everybody).
The benefit of signing all your checks is that your signature will be a requirement for money to leave the business. No cash will be deducted from the business bank account without your knowing about it.
For payroll checks, review the hours worked, pay rates, taxes deducted, and who the check is made out to. You should always know who works for you and how much they get paid.
If you’ll be on vacation for, say, a couple of weeks, the business will probably need to pay some bills while you’re away. You can deal with this in a couple of ways.
- You can decide to trust an employee enough to leave behind a signed check or two; the employee can then use these signed checks to pay for things such as an unexpected C.O.D. shipment.
- You can decide to simply require vendors to wait.
- Pay upcoming bills before your leave.
If you leave signed checks, be sure to leave specific instructions as to what these checks should be used for, and review the checks when they come back from the bank to be sure that your instructions were followed.
4. Make bank deposits nightly. As the business owner, you should make the nightly bank deposits. This is especially true for cash because it is so tempting and easy to steal. Your funds are much safer in the bank than in your desk drawer or the cash register.
5. Understand your books. Embezzlement is easy to miss and difficult to prove if your bookkeeping is sloppy or unsupervised. You need to be educated in how to review financial statements and know what to look for. Your accountant can show you how to do this, or you can take an accounting or bookkeeping course.
Use and review the QuickBooks Voided/Deleted Transactions Detail Report, found by going to the Reports menu -> Accountant & Taxes -> Voided/Deleted Transactions Detail. This report will show you who voided, deleted, or changed a transaction and when it was done.
Another report that you should review periodically is the Audit Trail Report; this report is accessed from the Reports menu -> Accountant & Taxes -> Audit Trail. This report can be very overwhelming, so it is our advice that you consult your CPA or QuickBooks ProAdvisor for help on what to look for in this report.
Employee embezzlement and theft costs U.S. businesses millions of dollars each year. Small businesses are especially vulnerable because the ramifications of theft can cripple a small firm and even force it to close.
6. Reconcile the bank and credit card statements yourself. Make it your company policy that you are the one who is responsible for reconciling the monthly bank and credit card accounts.
This way, you can make sure that no one is forging your signature and writing a check or two for non-business reasons.
This might seem unlikely, but if your business writes a hundred checks a month totaling tens or hundreds of thousands of dollars, would you really notice an extra check or two if the amounts were “only” a few hundred dollars?
7. Separate Mailroom Duty from Bank Deposit Duty. One of the most common ways to embezzle money from an employer is called lapping. To lap, an embezzler skims a little bit of the cash that comes in each month and then adjusts the books to hide the skimming.
As long as the person skimming the cash also maintains the checkbook, it’s easy for the theft to go unnoticed. The embezzler simply ignores or hides the fact that, for example, the $500 Customer A owes you has been paid.
You can minimize the opportunities for lapping if you have one employee open the mail and make notes on an Accounts Receivable report of incoming cash and another employee enter the bank deposit information into the computer.
For this approach to work, you simply compare the Accounts Receivable Report of incoming cash maintained by the mailroom person with the bank deposit information shown in the computer, and you contact customers about past-due payments. This way, you can discover, for example, that Customer A actually paid the $500 owed and that the check has cleared the bank.
8. Protect Other Valuable Assets. From an embezzler’s perspective, cash is the most convenient item to steal. It’s portable, easy to store, and easy to convert to other things an embezzler might want.
Because cash is usually watched so closely, however, embezzlers often steal other items of value, such as office equipment, inventory, and supplies.
You can follow a couple of general rules to minimize losses such as these. You can keep a record of the things that your business owns and periodically compare what your records show you have with what you actually hold.
If you buy and sell inventory, for example, keep a record of what you buy and sell. Then, once a month or once a year, compare what your records show with what you have in your warehouse or storeroom.
You can also restrict access to any valuable assets that the business owns. Warehouses and storerooms should be locked. Access should be limited to people who really need what is being kept behind lock and key. If you have items of high value in a storeroom, for example, and several employees have access, it’s also a good idea to make it a rule that people go into the storeroom only in pairs. (A dishonest employee is less likely to steal if someone else is present who may see and report the theft.)
9. Require Vacations. There’s a final embezzlement prevention tool that many big businesses use and that you should probably consider: Require regular vacations of a week or two. (Banks almost always do this.)
Here’s the rationale: Some embezzlement schemes are so clever that they’re almost impossible to catch. The one typical weakness of these super-clever schemes, however, is that they usually require ongoing maintenance on the part of the embezzling employee. By making the employee take a vacation, you can see what happens if the employee’s not around.
