If you’re one of the UK’s 1.2 million construction contractors, you’ll understand the pain of managing your finances. Every project is completely different, and you’re probably juggling several at the same time, so it can be near impossible to accurately predict timelines and payments.
Cashflow already has the potential to cause some major headaches. But then UK contractors must also deal with a prominent culture of late payments, and the added pressure of staying compliant with the Construction Industry Scheme (CIS).
Here are four ways construction workers can simplify their finances and get back to focusing on what’s important – running and growing their business.
Head to the cloud
When you’re not office-based, the temptation is to let the financial admin build up until you tackle it at the end of the month – but this means it can be easy for your accounts to run out of control. The cloud changes all of this. It allows you to get a full view of income, capture receipts with a phone and categorise expenses with a couple of clicks on a mobile app. Why not make the most of managing your finances on-site, instead of waiting until you’re back in the office?
Tackle late payments
Businesses in the construction sector have been hit hardest of any UK sector by longer waits for their invoices to be paid, according to the Asset Based Finance Association, with delays increasing 22% in 2016 from 67 days to 82 days. This year, the government introduced a new requirement for large companies to publish their payment terms bi-annually, and those signed up to the Prompt Payment Code must also pay suppliers within 60 days. But contractors can’t yet count on this overhauling a deep-rooted culture of late payments. They must take control or late payments will inevitably be passed on to subcontractors. Construction contractors should aim to have some reserves, be vigilant chasing late payments, and consider issuing penalties or adding interest for outstanding payments.
Managing CIS payments
Manually calculating and reporting monthly CIS deductions is a time-consuming and stressful task. No one got into this business because they loved taxes, deductions and compliance, so it’s time to move away from homemade spreadsheets to quick and easy payments tracking. By calculating and reporting on CIS deductions in the same place as their other finances, contractors will be able to save time, increase accuracy and get back to doing what they love – running their business.
Hiring an accountant
Construction industry payments are highly complex, so hiring an accountant could save you from making some costly mistakes. They’ll be able to make sure you’re fully compliant with the legislation and offer you valuable advice which will save you money in the long-run.
By using the technology that is available, and automating manual tasks, contractors can significantly reduce the amount of time they spend on financial admin. Overhauling processes and removing the need to spend hours calculating CIS deductions at the end of each month means they can get back to focusing on their business.
Dominic Allon is the Vice President and Managing Director, Intuit Europe.
To find out more about how QuickBooks CIS can help your business, visit our dedicated page.