Perhaps more than in any other industry, the construction industry is constantly dancing with legal requirements. Whether it is because they are required to abide by a lengthy contract on a project, or because they’re working on a state or federal construction project, contractors are always walking the fine line within every regulatory law.
While many contractors retain counsel to help explain the applicable laws and represent them in disputes or concerns, contractors too frequently overlook another professional: the accountant.
Quality and competent accounting advice and assistance is extremely important for those in the construction industry. This is not only to help maintain your vulnerable bottom line, but also to avoid making mistakes with costly regulatory consequences.
Think about it..
A construction project can have a price tag worth hundreds of thousands or millions of dollars, and a contractor or supplier may have hundreds of workers, suppliers, invoices, subcontractors and other parties or items slowing taking pieces of contract price. The contract price itself is based upon a bid that is vulnerable to unforeseen conditions, and increases in material or labor prices. Many projects require payment applications that request specific accounting information, and require that parties withhold retainage amounts. This is not even to mention prevailing wage requirements, and public reporting requirements.
When its time to get paid, do you know what is one of the most important pieces of “evidence” to have on your side? A clean accounting of the project’s costs.
Too many times our clients have great legal cases, but just sloppy books. If you encounter a payment dispute on a construction project, it will be nearly as important to clearly show (through good accounting) what was spent on the project and what you’re owed, as it will be to have good representation.
When entering construction industry contracts in the year 2020, of course think about legal issues that might arise. But don’t forget to keep your books clean, and to clearly track the money in and the money out on the project. And grab yourself a great accountant to keep your company on top of each project.