Bookkeeping for Construction & Building Companies

Construction has the hardest cash flow of any industry we work with, and the reason is structural. Materials and subcontractor labour are paid for well before the work they relate to is billed, and the amount billed is then paid on a cycle set by the contract rather than by you. Retentions are withheld from every claim and released long after the job is finished, sometimes long after the business has stopped thinking about it.

Western Australia’s security of payment legislation gives builders and subcontractors a defined process for making and responding to payment claims, with statutory timeframes for payment schedules and responses. The protection it offers is real, but it depends on claims being made properly and on time, and on responses being tracked. A business that does not know when a claim was served, when a schedule was due or when payment became overdue cannot use the framework it is entitled to. Keeping that timeline visible in your records is what turns a legislated right into an actual recovery.

Retentions deserve specific attention because they are the money most often written off by default. An amount withheld from each progress claim, typically released in stages after practical completion and at the end of the defects liability period, is genuine income that has already been earned. Where retentions are not recorded as receivable and tracked to their release dates, they simply stop being pursued. Across several completed projects this accumulates into a meaningful sum sitting with head contractors who have no reason to volunteer it.

Building and construction businesses are also generally required to lodge a Taxable Payments Annual Report covering payments to contractors, and in Western Australia construction projects above the relevant value threshold attract the Construction Training Fund levy, which needs to be accounted for on the projects to which it relates rather than treated as a general overhead.

Underneath all of it sits job costing. Without costs allocated to the project they belong to, a busy year and a profitable year are indistinguishable until the accountant tells you which one you had.

We set up job costing so each project carries its own materials, labour and subcontractor costs, keep progress claims and retentions tracked to their due dates, record contractor payments through the year and prepare your TPAR, run payroll, and prepare your BAS.