10 Mistakes to Avoid

In his presentation at this year’s CFMA Annual conference, Mr. Billy Robinson with Brown Edwards CPA group, Tennessee office, shared the top 10 mistakes they see in their work with Construction companies. Here’s a recap of what was shared.

1) Cash Flow: staying on top of receivables is very important; when you are underbilled, a reminder that you are financing their project!; and some things to consider regarding too much cash in the business and the exposure if there is litigation.

2) Inadequate Succession Planning: a reminder that there are families counting on you to have a plan; they also see a lack of communication among family members regarding what plans are in place and what to expect; there are a lot of emotions during the planning and execution of a succession plan, and these real emotions have to be considered and addressed.

3) Under investing in Report Systems and Controls: we see some of our fastest growing clients embracing new reporting tools such as Power BI; at the event, he mentioned Project Fade as margins erode due to blown budgets; the importance of a monthly WIP schedule review; and the risk of using unearned funds to pay current AP; lack of construction accounting knowledge; underestimated fraud risks.

4) Accountability: schedule meetings for a post mortem on jobs over a certain size; holding everyone to the same standards; avoid overlooking policy violations; hold clients and vendors to contract terms!

5) Equipment Investment: avoid too much debt on equipment; consider underutilized equipment; lease versus owned; staff to maintain.

6) Integrity Issues:

7) Culture and Loyalty: hold high performers accountable!

8) Growth versus Profitability: can you do the work with the team you have?; concerns for burn out of the team.

9) Professional Advisors: Spend the money and time and use them!  

10) Blind Spots: Performance and Integrity as the standard versus Longevity

When considering this list, what are one or two items you could focus on as we look ahead to the end of 2024? Some of these come down to your company’s goals and desired outcomes. Others are about being a good steward. Let us know if we can help with any of these or even just do some brainstorming with you! – CMW