Managing expenses is primarily about good recordkeeping. Most personal expenses are simple—you get one or two paychecks a month and have five or ten bills to pay. It’s difficult for a business. For construction companies, even more so. However, addressing the issue of construction expense management system has great advantages. You’ll be able to effectively price projects, keep employees and subcontractors happy, and reduce overall project stress.
So, let’s take a closer look at the best tips for effectively managing employee expenses on a construction job site.
Identify Overhead Vs. Job Costs
The first step in managing your employee expenses is to define overhead and indirect costs more precisely. Because managing your business expenses as an ambiguous line item completely prevents you from identifying patterns, maximizing revenue, optimizing tax deductions, and appropriately pricing your construction projects. After estimating your overhead costs for the year, you can break them down monthly and use that as a baseline when calculating job costs. Your overhead should be kept as low as possible, so that job costs can be more clearly defined and reflect real needs.
Set Budgets on Every Job Site
Management of multiple sites and budgets is required in the construction industry. Instead of giving your project managers, site managers, or contractors a general budget for each project, you should help everyone manage business expense tracking better by customizing budgets to the job site and project at hand. Set your budgets for each job site separately, with clear expectations. Going over the budget on employee expenses or labor costs may be necessary on occasion, but it should always be done through you first.
Upgrade to Digital Expenses
Nowadays, every contractor has a smartphone with them. There’s no reason for your construction workers to be struggling to cope with receipts and expense report paperwork across multiple job sites. You’re probably bouncing around multiple job sites as the owner of a construction company, and chances are your best project managers are, too. As it is more efficient, it is critical to be able to connect your expense tracking with mobile expense reporting. Use mobile expense management online or accounting software that allows you to capture receipts and generate automatic expense reports.
Contractors’ Business Cards
If you have one or two reliable project managers, they may have a corporate card. Some construction business owners may use their personal credit cards or drive around, making the necessary purchases. Reimbursing employee expenses after the fact is even more common but asking your contractors to float expenses comes with its own set of issues. Rather, we recommend issuing corporate cards to each and every contractor who may need to make purchases. You’ll actually have more security and visibility into your employee expenses if you create carefully constructed budgets and smart expense reports.
Regularly Review Your Expenses
It is not the time to add up all of your employee expenses from the job site after it has been completed. Waiting until the job is completed, or even until the end of the month, maybe too late to realize you’ve gone way over your approved expense limit. Analyze employee expenses and budgets on a weekly basis so that you can cut any unnecessary spending as soon as possible. An additional resource helps you to improve your expense reporting.
Final Words
In the construction industry, you build your bottom line as you manage expenses on each job site. Setting up your expense policies and continuing to track the data more closely will require effort, but the increased visibility will pay off as you gain a better hold on that profit margin.
Zaggle EMS is an all-in-one expense management software that helps you manage your spending on every construction site you manage. Schedule a demo with us and find new opportunities to save money for your business.
