Projects vs. Business: The Truth About Construction Financials

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Summary
In this conversation, Ryan Ware and Guest Jessica Krause discuss the critical importance of financial management in the construction industry. They explore the unique challenges faced by construction accountants, including job costing, cash flow management, and the complexities of change orders. The discussion emphasizes the need for effective communication between project teams and accounting, the risks of not tracking financial data, and the broader implications of financial mismanagement on the industry as a whole. Jessica shares strategies for improving financial practices and highlights the importance of having the right people in place to manage financial data effectively.

Takeaways

• Construction accounting requires specialized knowledge due to its complexities.
• Effective communication between project management and accounting is essential.
• Job costing and cash flow management are critical to avoid bankruptcy.
• The cost of not tracking financial data can be detrimental to a business.
• Financial mismanagement can have a ripple effect on the entire construction industry.
• Success in construction relies on the collective success of all parties involved.
• Investing in financial education for staff is vital for better management.
• A growth mindset is essential for contractors to thrive in the industry.

Chapters
00:00 Introduction to Construction Accounting Challenges
03:44 The Unique Complexities of Construction Accounting
06:43 The Importance of Communication in Construction Projects
09:45 The Role of Technology and Systems in Construction Accounting
12:56 Managing Change Orders and Project Budgets
15:47 The Ripple Effect of Poor Financial Management
18:59 Success in Construction: A Collective Effort
21:52 First Steps to Improve Financial Management
24:47 Conclusion and Call to Action

Guest:

Jessica Krause, Founder and Owner of New Lyfe Accounting,  CPA & CCIFP

Jessica’s passion for the construction industry stems from its place in her childhood, growing up in the family sheet metal business. Her career began in public accounting before she eventually became CFO for a Commercial Electrical Contractor based in Kansas City. While in that position, she realized the need for a specialized accounting firm within construction, one that understood the industry’s complexities, processes, and people. From that discovery, Jessica founded her firm, New Lyfe Accounting (NLA), in 2017. Jessica holds a Masters of Science in Accounting from the University of Missouri, Kansas City, and has been a Certified Public Accountant for 15 years. She’s been a member of CFMA since 2013, holds a CCIFP designation, and is an active member of the Specialty Trade Committee of CFMA. 

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