Construction Newsletter

Summer 2018

Dealing with Tariffs
Partner-in-Charge: B&C Construction Services
315.234.8157

The construction industry has for the most part enjoyed favorable summer weather so far, and I am crossing my fingers it continues into a mild winter so your projects can be completed on time!
 
There is a lot going on in the world currently and much of it will affect the construction industry.  One of the areas that I have been watching are the tariffs being applied to imported steel.  There is no doubt that domestic steel mills will benefit from this move.  However, organizations such as the National Association of Home Builders and the American Institute of Architects have spoken out against the tariffs because they believe the result will be increased cost of construction and the potential for lost jobs.
 
Steel and aluminum contribute less than 1% of a typical single-family home construction cost.  So, the effect to the home buying market will be minimal.  However, larger buildings and infrastructure projects that rely much more heavily on steel could see a significant increase in material cost. Many industry experts believe that the tariffs will have a negative impact on the construction industry due to the introduction of price uncertainty.  That uncertainty could lead to price volatility until the market stabilizes.
 
I do not have a crystal ball and I cannot predict the ultimate effect on your business.  I would recommend staying in contact with your suppliers as they may have knowledge of potential price increases.  To the extent possible, pre-order materials before any potential price increase goes into effect.  Also, make sure you are including potential price increases into your bids.  No doubt, this uncertainty could lead to volatility.  You need to be prepared to respond to the volatility with the most up to date information available and perhaps a little caution.  I hope you have a productive summer and fall construction season!  
  

Life Insurance: More than Pure Protection
Registered Principal, Diversified Capital Management, LLC
315.234.8167

Most of us have insurance of some sort. Car insurance, home insurance, liability insurance, life insurance, etc. Insurance is typically viewed as a necessary nuisance. We pay our premium to have protection in case we experience a loss. 

The focus of this article is going to be the benefits of life insurance aside from the pure protection, death benefit. Life insurance can help accumulate tax deferred growth by providing a flexible savings option with or without market volatility and can help offset the cost of long term care if needed.   Learn More>>>


What does the future hold for you cash flow?
They say you can't predict the future.  But knowing what the future holds for a construction company's cash flow is, in many ways, the key to its success.  This article describes how to create a cash flow forecast by evaluating incoming cash flows, creating billing schedules and putting the data to work for you.

Evaluate your inflows

The first step to realistic forecasting is to approximate incoming cash flows. Start with projected cash flows for planned, in-progress or completed jobs for which you haven't billed or collected fully. This task relies heavily on billing schedules.

At the beginning of each project, develop a well-thought-out, front-loaded billing schedule. Doing so will optimize cash flow by helping you anticipate timelines of costly expenditures related to the project, and allow you to schedule a billing cycle directly after each expense.    Learn More >>>


Consider a Different Route
Four accounting alternatives that may reduce financial reporting costs

Many privately held construction companies prepare audited financial statements that comply with Generally Accepted Accounting Principles (GAAP) as established by the Financial Accounting Standards Board (FASB). They do so, at least in part, to satisfy the requirements of lenders, sureties and other business partners.

Many of GAAP's requirements benefit private businesses and their financial statement users. But, for some contractors, the limited value doesn't justify the additional cost and complexity. Recognizing this, the FASB's parent organization, the Financial Accounting Foundation, established the Private Company Council (PCC) in 2012. The PCC's mission is to recommend exceptions or modifications to GAAP that respond to the needs of private companies.      Learn More >>>  


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