{"id":17540,"date":"2019-09-12T08:00:20","date_gmt":"2019-09-12T13:00:20","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=17540"},"modified":"2023-08-22T11:08:49","modified_gmt":"2023-08-22T16:08:49","slug":"developing-an-advisory-workflow-to-support-construction-clients","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/practice-management\/developing-an-advisory-workflow-to-support-construction-clients\/","title":{"rendered":"Developing an advisory workflow to support construction clients"},"content":{"rendered":"

As tax and accounting firms continue to discover new opportunities for advisory services<\/a> and niche<\/a> specialization, the construction industry has become a target. Because many construction companies face mounting technological demands, labor shortages, regulatory issues and increased consumer demand for eco-friendly materials, professionals who understand the industry’s challenges and can facilitate solutions are becoming increasingly valuable. In this article, we’ll discuss the key opportunities within the construction industry, and offer advice on how to establish your firm’s presence within this underserved sector.<\/p>\n

Key Challenges<\/b><\/p>\n

Contractors within the construction industry often face many financial problems and project delays because they lack internal control systems and unclear or incorrect financial data. Many of these challenges can be addressed by a firm, but there are also additional opportunities for professionals who offer outsourced CFO services.<\/p>\n

Improper job cost accounting.<\/b> Correctly mapping expenses to their respective projects is vital to success within an industry as capital intensive as construction. Generally, job costing allows a company to come up with a reliable estimate of the total costs for a specific project. Proper job costing enables contractors to account for project costs, such as materials or labor, and overhead expenses, including travel time or equipment rentals. Because many companies estimate projects based on erroneous financial data, contractors often misallocate costs and are unable to determine the true profitability of their projects.<\/p>\n

Lack of financial analysis and forecasting.<\/b> Tracking financial reports and analyzing opportunities for efficiency or growth are essential activities for all companies. As material costs fluctuate and technological advances occur, financial forecasts can help companies handle cash shortages, and discover new opportunities for efficiency and profitability. Without this data, contractors struggle to maintain sufficient cash reserves throughout the year, and may incur additional loan debt for upfront labor and material costs.<\/p>\n

Navigating industry changes and regulations.<\/b> Tariffs and sustainability issues are among the top concerns. Contractors face an increasing amount of scrutiny regarding environmental sustainability and seek to implement emerging technologies.<\/p>\n

Three Steps to Developing an Advisory Workflow<\/b><\/p>\n

Creating a niche within the construction industry allows your firm to anticipate the unique needs of construction clients. The right tools and appropriate education can place your firm at the top of this profitable industry.<\/p>\n

#1: Define your target audience.<\/b> While it may be easy to assume that all companies within the industry are the same, this is not true. As Diane Gilson discussed in her article on serving the construction niche<\/a>, “[Different] construction companies operate differently, are run by varied personality types, have unique accounting requirements and will require specific management reports.”<\/p>\n

Here are a few of the many types of companies within construction:<\/p>\n