3 Questions to Find the Right Accounting Partner for Your Construction Business

This article was originally written in October 2020. It has been updated with new references and information.

Hiring a new accounting partner for your construction firm can be a challenge. Even the definition of an ideal firm can be confusing.

Chris Little, CPA, Partner Construction and Real Estate Team Leader at Redpath, emphasizes that hiring an outsourced accounting partner starts with defining roles clearly. He poses two essential questions to guide the decision: 

"Do you need people who will just do the day-to-day work?" he asks. "Or, do you need people who will be real visionaries for your company?"

The line between the two can be hard to find during the search. To help your firm make the right choice, Chris says there are several considerations to keep in mind when hiring construction finance professionals.

Why Hiring Accounting Leadership Can Be a Challenge in Construction

Construction firms looking to size up their finance team, or even replace key members, need to be aligned on role expectations. These expectations should include:

• Expertise in financial modeling and forecasting
• Risk management
• Ability to integrate technology-driven solutions into financial operations 

As businesses evolve and change, finance and accounting leadership is being relied on more to play a key role in strategic planning. Anyone with the responsibilities of a controller, for example, should be able to tell you what business decisions you need to consider to maximize profits. The finance and accounting function is directly connected to all departments in a company, whether it is operations, human resources, or information technology. 

Chris believes that is a key element not every construction firm considers when hiring accounting partners. 

Ideally, "a good controller should be a profit center," Chris notes. They should also be able to "communicate your other business goals," factoring other aspects of your business (like operations) into their decision-making to minimize missed opportunities for profit.

Chris says the need for forward-thinking people in these roles is based on one simple fact: "All of your tax planning and financial direction is derived from accurate and timely information," he says, and when that information changes, you "may not know what you are missing." 

Rapid growth, especially among smaller contractors, often justifies a closer look at whether or not your finance team needs to evolve to keep up.

What to Look for in a New Construction Accounting Partner

With experience across several industries, Chris says there are three specific attributes he advises construction companies in particular to look for in their accounting partners:

• Construction accounting background. The nuances of financial and tax planning in the construction space are not usually part of a general financial planning background. "A public accountant understands accounting," Chris says. "An industry expert understands the business." Making the right choice is about bridging that gap.

• Breadth of experience—not just depth. Chris says the ideal partner's résumé should show some extent of construction accounting experience. That experience could be from working with similar industry clients as public accountants, or in parallel roles in the private sector. Career levels at each are generally less important than the ability to recognize and approach challenges from multiple perspectives.

• Technology fluency. Look for candidates and firms who understand construction-specific software platforms and can leverage technology to improve financial visibility and reporting efficiency.

3 Questions to Ask During Evaluation

Hiring for a construction accounting position is challenging from several angles. You need to find people capable of doing the work, communicate with your team, and start quickly. But Chris says "you have to expand beyond the résumé" if you want to do more than fill a temporary need.

The next time you are evaluating people for these roles, ask these questions:

• "How soon should monthly books be closed?" Look for people who advocate for timely reporting. "Too many companies spend time catching up on month-end close when the industry leaders have already closed and are spending their time making forward-looking decisions," Chris says. Having quick access to financial data has become essential for agile decision-making.

• “How will you bridge the gap between finance and operations?” Effective communication between the finance team and operations is one of the most important roles in this position. Look for partners who focus on open and effective communication with not only others within the accounting team, but others highly involved in the operations of the company.

• “What makes a reliable WIP schedule?” It is one thing for a partner to understand the mechanics of a job schedule. But having a deep understanding of the nuances of construction accounting will separate a firm from the rest. It is crucial that they understand the impacts of accurate job costing, real-time estimates, change orders, and potential claims—and how that can impact the profitability of a job. The ability to adjust WIP reporting during periods of material price volatility has become an increasingly valuable skill.

Construction Finance Leadership

Do not let market volatility, regulatory changes, or tax legislation complexities derail your construction business. The right financial partner helps you build a stronger foundation for growth.

If you are ready to enhance your profitability, our construction industry specialists provide the expertise you need in strategic financial operations, construction-specific tax planning, merger and acquisition guidance, and risk mitigation and compliance.

Schedule a consultation today to discover how our dedicated construction advisory team can help you construct a more profitable future.