We understand construction! We have experience from site support to back office execution, and we walk every mile with our clients. Whether it's full service CFO/Controller engagements, helping to secure lending, providing project and full cycle accounting, bookkeeping or AR/AP and payroll, the Affinity team is there. We have advised builders and developers on every aspect of managing their business finances and understanding the risks inherent to the industry. Our team can provide you clarity on the bottom line, and the freedom to focus on the safe execution of your project.
"Bookkeeping, AR/AP, Payroll, Bank and Client meetings"
We Can Help!
Job Costing - Whether you're an industrial, commercial or residential contractor, large or small, you need to know and understand your costs. Construction accounting and bookkeeping is unique, and we can provide the expertise to remove the noise and focus on what really matters.
Management Support and Back Office - As resource loading changes from project to project staffing a full finance department doesn't always make sense. The Affinity Group can fill this gap, providing fractional CFO/Controller engagements and back office support which can include accounting, bookkeeping, AR/AP and payroll.
Accurate Reporting - Reports can light the way! many of our contractors face tight timelines, crashed schedules and hardline clients. Accurate and timely reporting can make the difference, whether coming in on schedule, making payroll or securing financing, we provide you the right information at the right time.
"Construction Accounting That Saves Time And Money"
Additional Construction Accounting Best Practices
Cost-basis Accounting - When it comes to construction accounting methods, there are two primary choices: cash basis and accrual basis. Smaller construction firms often opt for the more straightforward cash-basis accounting system: The company simply records revenue when it is received and expenses when vendors are paid. Cash-basis accounting simplifies day-to-day financial management and requires less financial expertise. A caveat: Construction companies with average revenues of more than $25 million can't use cash accounting for tax purposes, regardless of job materials percentage.
Accrual-basis Accounting - The alternative method, accrual-basis accounting, is more complex — but it’s required for larger companies, including public companies that must comply with the Generally Accepted Accounting Principles (GAAP) issued by the Financial Accounting Standards Board (FASB). It also underpins specialized revenue recognition accounting approaches, such as the percentage of completion method, described below.
Accrual-basis accounting recognizes revenue as work is completed and expenses when they’re incurred, which may not be when money actually changes hands. It generally provides a more accurate representation of a company’s finances, but it can obscure short-term cash flow issues — a company may appear profitable on paper even if payment delays from customers are causing cash-flow problems.
Percentage of completion method - PCM is a widely used accounting approach that enables contractors to recognize revenue for each project as they earn it over time. During each project, the contractor bills in stages for work performed to date and records the earned revenue and expenses at each stage. It’s seen as the most accurate way of recording revenue and expenses so that they match the work performed, and banks and lenders often prefer it.
PCM works well if you are able to generate accurate estimates. PCM can also help ensure that contractors get paid for their work even if a construction project does not proceed to completion.
Tell us about your construction accounting and project needs!