FREE Scorecard For NAHB Members: 

7-Minute Accountant Scorecard

This 7-minute checklist will help you evaluate your accountant's performance and avert danger

Best Practices:

Easily Evaluate Accounting's Performance

The Cost of Bad Accounting

ABOUT REALCOUNT

Making financial decisions based on erroneous data negatively impacts cashflow 

Cashflow

Expenses

Missed Projects & Opportunities

Fees & Penalties

Time

Trust

Copyright 2023 RealCount

Quarterly payments are overdue, books are behind, financial data is unavailable, taxes are in arrears, and penalties are looming. Most builders and investors wait until their business is negatively impacted to commit the time to review their accountant’s performance. While the best way to protect your business is to routinely evaluate your accountant, this doesn’t need to be a lengthy, time-consuming process, however.

Bad accountants cost money and time, good accountants are helpful and worth their fee, and great accountants actively improve a business’ financial performance. Determining which bucket your accountant falls into comes down to the following factors:

TIMELINESS

Builders know the costs of missing deadlines all too well. But with an endless to-do list and vendors and contractors to keep on schedule, no builder should have to waste time keeping accountants on task. Missing deadlines over the last three quarters is an indicator that an accountant is unfocused, distracted, or simply doesn’t value their client.

This goes for reporting as well. Construction businesses run on accurate, up to date reporting. Having to constantly issue reminders to an accountant is tedious, but having to apologize to stakeholders for tardy financial reporting slows projects down and, worse, erodes trust.

Great accountants, however, plan for deadlines, automate reporting ahead of time, and proactively provide confirmations of hitting critical deadlines so builders can stay focused.

ACCURACY

There’s no expectation that a builder should pour through their accountant’s work line-by-line. Reports and outputs should pass the “sniff test,” though. No one knows your business better than you and, while some surprises are to be expected as part of business, it’s worth taking a look at numbers that don’t seem to stack up. Reviewing the last few P&L and balance sheet reports is a good place to start. Often issues will jump out, such as high retirement plan expenses when the organization doesn’t offer a retirement plan or revenue attributed to the wrong month or simply not recorded. An accountant’s business value is rooted in accuracy, so struggles with accuracy are significant a red flag and a potential risk to a builder’s business.

One green flag to look for is an accountant who proactively offers advice and guidance to improve the business. Seasoned and specialized CPAs can see where a business is heading and offer advice resulting in tax savings, more efficient operations, and reduced expenses. And an accountant who can double as a CFO provides significant value to any business.

COMMUNICATION

Accountants who struggle with communication can be infuriating, especially when they only seem to respond on their own schedule. If responses are typically more than 48 hours it’s not just an indicator that an accountant struggles with time management, it also points to their being too overburdened to provide helpful or even accurate information. Similarly, generalized or non-specific answers to questions is another indicator that the accountant isn’t prioritizing the account or even that they don’t know the answer.

Another common practice of overburdened accountants is pushing work and communications to junior staffers. Not all work needs to go through the head accountant, but builders should have the majority of conversations with the CPA they hired, not a junior accountant.

Conversely, a great CPA may quickly respond but request additional time to review the business’ financial data before answering questions. This is a green flag as CPAs who first take the necessary time to understand questions in the context of the business, its financials, and its overall strategy often provide better answers and more value.

KNOWLEDGE

Beyond the challenges of communication, timeliness, and accuracy the biggest red flags come when an accountant can’t provide their primary service due to lack of knowledge. It’s fast and easy to check whether an accountant has their CPA license and if it’s current (this tool will help: https://app.cpaverify.org/search). Surprisingly many accountants either aren’t certified or have let their certifications lapse.

Accountants who overly reference Google are also a concern. If an accountant shows more search skills than accounting knowledge when responding to questions, it’s likely that are likely doing the same thing when it comes time to process financials and prep taxes. Trusting taxes to Google is a thought that should keep most builders up at night.

Great accountants, however, are in sync with their clients and understand their businesses. Real estate expertise is a tremendous advantage for a CPA with a builder client. Serving a majority of real estate accounts gives a CPA a much greater understanding of the industry and the inner workings of a builder’s business. Additionally, that extra understanding should translate into at least one or two solid ideas to improve the business every few quarters.

BOTTOM LINE

The cost of suffering poor accounting is more than annoyance and inconvenience. Waiting to discover that an accountant’s “quirks” are actually risks waiting to be realized can cost builders real dollars, project opportunities, and lost time. Putting together a scorecard with these red and green flags gives builders a fast and consistent way to regularly assess accounting’s performance. This helps identify potential risks before they become issues and builds trust with stakeholders.

FREE Scorecard For NAHB Members: 

CFO|REAL ESTATE CPA | BOOKKEEPING | TAX ADVISORY

Tax laws make accounting and bookkeeping for real estate different than any other industry. RealCount is a team of CFOs, CPAs, and bookkeepers from all over the real estate sector and we believe that real estate-specific experience is the only way to realize the full tax benefits exclusively available to our industry. Led by a real estate investors, developers, and home builders who have successfully accounted for, planned, and managed over $4B in transactions per year, RealCount focuses exclusively on the real estate industry, helping investors, developers, builders, brokers, and operators to better numbers. 

CFO | REAL ESTATE CPA | BOOKKEEPING | TAX ADVISORY

ABOUT REALCOUNT

Evaluate Accounting's Performance in 7 Minutes

Poor financials make loans harder to get and drive away new projects

Making financial decisions based on erroneous data negatively impacts cashflow

Inexperienced accountants take more time, leading to greater CPA fees and expenses

Out-of-date books and financials lead to overdue invoices, late taxes, and penalties

Managing and double-checking accounting's work costs time that builders don't have

Questionable financials erode hard-fought trust with stakeholders and investors

Inexperienced accountants take more time, leading to greater CPA fees and expenses

Out-of-date books and financials lead to overdue invoices, late taxes, and penalties

Questionable financials erode hard-fought trust  with stakeholders and investors

The pain of bad accounting affects every corner of a business.

Managing and double-checking accounting's work costs time that builders don't have