Construction Accounting and Financial Management

As per the Surety Information Office the six warning signs that a construction company is in financial trouble are as under:

1. The financial management systems of the construction companies are ineffective and inefficient. Financial strategies are not designed and worked out properly.

2. Excessive use of bank loans. The company has borrowed the loan from bank touching the upper limits of credit.

3. Inefficient estimation and poor and ineffective job cost reporting. Means that the information provided associated with estimations and job cost reports are not up to the satisfaction.

4. The project management techniques used by construction companies are poor and imperfect. Projects are not managed as per the requirement; the policies applied therein are weak and inefficient.

5. Construction companies do not rely on comprehensive business plans. Thus thinking before doing is absent in their work practices. Work without proper planning often results in failure.

6. Proper lines of communication are absent in construction company which is the main mark of its failure. Smooth and free flow of information is important for the progress and success of any business.