What should contractors consider when choosing a new accounting firm?
Joseph Natarelli
National Construction Leader
CBIZ
The most important thing is first-hand industry experience. There are many unique facets of the industry that make experience invaluable, from applying the tax code to specifics in contract language and formulas for financial calculations. The right provider will offer the range of services necessary to build your best business—credible and accurate guidance on relevant laws, labor regulations and compliance requirements, and advice on growth, planning and profitability. Adding value goes well beyond crunching numbers—it means meeting your needs today and growing with you into the future. Then there are intangibles like client support, relationship management and availability to deliver answers fast. Finally, clear pricing so you know what to expect and can assess the practical value of these services.
Aaron Faulk
Principal
Baker Tilly (formerly Moss Adams)
When considering a new accounting firm, it is essential for contractors to seek out professionals with deep expertise and involvement in the construction industry. A firm that understands the construction landscape can deliver significant value—financially and strategically.
There are several unique tax filing options for contractors, many of whom are eligible for industry-specific credits and incentives. A firm who understands these opportunities and can identify the options available can help navigate complexities and identify meaningful tax savings.
On the financial reporting side, credibility is critical. An accounting firm familiar with construction standards and disclosure requirements ensures your financials meet the expectations of external stakeholders including sureties and lenders. Well prepared financials that meet industry and accounting standards build trust and strengthen your position during prequalification and financing discussions.
Beyond compliance, the right firm should act as a strategic advisor, offering insights on budgeting, benchmarking, deferred compensation, entity structure, succession and estate planning. They should also provide access to a broader network of construction focused professionals such as bankers, surety agents, construction technology firms and legal counsel.
To determine whether a firm truly understands construction, seek referrals from fellow contractors, trusted service professionals or trade associations. Then look for indicators of true expertise: credentials like the Construction Financial Management Association’s Certified Construction Industry Financial Professional designation, active involvement in industry associations and participation on relevant boards. These indicators demonstrate meaningful, hands-on experience and a long-term commitment to the construction industry.
What are common mistakes business owners make when managing their wealth?
Thomas Dearnley
Managing Principal of Industry—Construction
CLA (CliftonLarsonAllen)
A common issue business owners make is over-reliance on the business as their retirement plan. Focusing solely on a business sale while neglecting the critical planning that should happen beforehand is a common mistake. Estate and tax planning—ideally started well in advance—are often postponed until after the transaction, missing key opportunities for efficient wealth transfer aligned with the owner’s goals.
Emotionally, many owners avoid difficult conversations with family which can lead to future conflict or entitlement issues. Financially, they often underestimate the cash needed post-sale. Effective wealth management involves setting aside funds for taxes and building a financial plan that maps out future spending needs. Once this foundation is in place, a resilient investment strategy can be implemented to help provide long-term growth outpacing inflation and expenses.
Risk management is another essential component—particularly having the right insurance coverage in place to protect assets and income.
Selling a business is a complex financial and emotional journey. Having a strong advisory team in place well before the transaction—covering tax, estate, cash flow, risk and investment planning—is critical. This preparation not only helps you navigate the sale with greater ease but also provides clarity, confidence and flexibility for the next chapter of your life.
The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CLA) to the reader. For more information, visit CLAconnect.com.
CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer.
What are some best practices for managing cash flow year round?
Carl Oliveri, CPA, CCIFP, CFE
Partner, Construction Practice Leader
Grassi
Cash-flow management is a way of life for successful contractors. It starts with cash-flow forecasting at the project level, to identify when and if the job will require a cash infusion or show excess cash for other operating purposes. The project-centric forecasts should then be integrated into a companywide model, layering in overhead and other non-job cash inflows and outflows to arrive at a global cash-flow forecast for similar purposes. The key is that these reports are alive, meaning they need to be maintained and updated to reflect real-time conditions, providing stakeholders with a proactive lens into managing cash flow.
Aaron Partridge
Principal
Doeren Mayhew
Cash flow is the lifeblood for construction companies that traditionally face fluctuating costs, supply-chain issues and razor-thin profit margins. Solid cash-flow management practices can make a difference between success and failure, especially during economic uncertainty.
While credit lines remain a valuable tool for weathering financial shortfalls, taking steps to improve cash flow year-round can help minimize dependence on bank credit and better position contractors financially through any economic cycle. Even a construction company that’s highly profitable on paper can fail if it lacks the cash it needs to complete current projects and competitively bid on new ones.
I recommend all my contractor clients maintain regular cash-flow forecasts to help identify any shortfalls well beforehand, negotiate front-loaded billing schedules to cover substantial upfront costs, eliminate or reduce project retainage, stay on top of invoicing as well as collection of receivables and, most importantly, have strong change-order management controls in place to avoid scope creep.
Taxes can also have a big impact on cash flow. It’s important for construction businesses to regularly reevaluate their tax position and accounting methods. In some cases, changing accounting methods may provide an opportunity to defer taxes—thereby improving cash flow.
Andrew Donohoe
Director—Construction Industry Lead
Dean Dorton
Effective cash-flow management is essential for contractors to maintain stability and grow sustainably. Start by developing a monthly cash-flow forecast to anticipate income and expenses. This helps identify potential shortfalls early and allows for proactive planning. Additionally, consider developing a cash-flow forecast for each job so that the project team can have open communication with accounting as to what the expectations are on each job.
Invoice promptly upon project milestones or completion and clearly define payment terms (e.g., Net 15 or Net 30). To avoid delays, implement a system to track receivables and follow up consistently on overdue payments.
Negotiate favorable terms with both clients and suppliers. Request upfront deposits or progress payments for large jobs and try to align outgoing payments with incoming cash.
Control overhead costs by monitoring spending and avoiding unnecessary purchases, especially if the business experiences slower seasons. During peak periods, be proactive in building a cash reserve to cushion against leaner months or unexpected changes in the business.
Maintain access to short-term financing like a line of credit. Use it strategically to avoid long-term debt. This is increasingly important in times of higher interest rates, like what the U.S. is currently experiencing.
Track job costs in real time using project management tools to ensure profitability and prevent budget overruns.
Understand your business’s seasonal trends and adjust staffing, marketing and inventory accordingly.
Finally, leverage accounting software to automate financial tracking, generate reports and gain real-time visibility into your cash position.
By combining proactive planning, disciplined billing and smart financial tools, contractors can maintain healthy cash flow throughout the year.
John Gallo
National Construction Practice Leader
UHY
A best practice for construction contractors to manage cash flow year-round is to develop and regularly update a detailed cash-flow forecast. This should include projected inflows from progress billings, retainage releases and change orders, as well as outflows for labor, materials, subcontractors and overhead. Maintaining strong billing practices—such as billing promptly and following up on receivables—is essential. Negotiating favorable payment terms with vendors and managing project schedules efficiently can help align income with expenses. Finally, monitoring work-in-progress schedules and backlog ensures that future cash needs are anticipated and that financial decisions are proactive rather than reactive.
Michael B. Ceschini, CPA, CCIFP, CM&AA
Managing Member
Ceschini CPAs Tax & Advisory PLLC
Managing cash flow in the construction industry presents unique challenges due to the variability of projects, long billing cycles and complex contract structures. To stay ahead, construction companies must be proactive and strategic year-round.
Start by reviewing and negotiating contract terms that protect your cash flow, especially billing schedules, payment timing and retainage terms. For example, seek payment for materials once delivered to the site rather than upon installation, and negotiate phased reductions in retainage as project milestones are met (e.g., 10% reduced to 7.5% at 50% completion).
Additionally, maintaining a rolling 12-week cash-flow forecast allows you to anticipate and respond to short-term needs. Pair that with an annual budget and regular reviews of actual results to ensure alignment with financial goals.
Other best practices include minimizing under-billings, maximizing over-billings where appropriate and processing change orders quickly to avoid invoicing delays. Accepting electronic payments can also improve collection speed and reliability.
Finally, don’t overlook tax deferral strategies. Coordinating with your accountant can help reduce short-term tax liabilities and preserve working capital. And when projects wrap up, efficient punch list management and a disciplined closeout process will help ensure final payments aren’t unnecessarily delayed.
Taken together, these steps provide a practical framework for improving cash flow and profitability in an industry where margins are tight and timing is critical.
How might a recession affect the competitive landscape and what strategies can construction firms put in place now to prepare for the possibility?
Brad Werner
Partner, CRE Industry Leader
Wipfli
A recession reshapes the competitive landscape by compressing margins, slowing project pipelines and intensifying the fight for fewer opportunities. In this environment, construction firms that proactively strengthen their foundations will be best positioned to not only survive but also grow. Firms should begin by enhancing transferability: building businesses that are scalable, not overly reliant on current leadership and operationally sound. This includes refining strategy, leadership structure and financial health to attract capital and remain agile in a shifting market. Recessions also create windows for strategic acquisitions. As valuations dip, well-prepared firms can expand their capabilities or enter new markets by acquiring distressed competitors. Specialty contractors with recurring revenue models—such as HVAC, plumbing or mechanical services—are particularly attractive in this climate. Private equity interest in these segments is rising, offering new partnership and exit opportunities. Operational discipline is another differentiator. Firms that invest in project management tools, cost controls and technology to reduce process debt will outperform peers.
Additionally, firms that focus on niche markets, whether geographic or sector-specific, and align their services with resilient sectors, like infrastructure or healthcare construction, can insulate themselves from broader market volatility. In short, the firms that treat downturns as strategic inflection points rather than threats will emerge stronger, more efficient and more competitive.
Jon Zeiler
Partner
Crowe LLP
A recession can reshape the construction industry’s competitive landscape by reducing project demand, tightening credit access and intensifying competition. Firms may face delayed or canceled projects, aggressive bidding wars and rising business failures. However, downturns also present opportunities—such as acquiring struggling competitors or accessing a more available labor pool.
To prepare, construction firms should first focus on strengthening financial health. Building cash reserves and streamlining costs are critical for surviving lean periods. Diversifying revenue streams—through public infrastructure, renovations or entering less-affected markets—can also stabilize income.
Strong client relationships are another key asset; offering flexible contracts and exceptional service helps retain business. Firms should also be ready to capitalize on acquisition opportunities, using downturns to expand capabilities and market share.
Finally, robust scenario planning ensures agility. By modeling and forecasting economic impacts and developing contingency plans, companies can adapt swiftly and maintain strategic clarity.
With foresight and discipline, construction firms can not only weather a recession but emerge more competitive.
Louis Sandor III, CPA, CCIFP
Partner, Practice Leader, Construction Services
Withum
The economy—and the construction industry—has seen an extended growth cycle, fueled by government spending, tax relief, post-pandemic consumer behavior and strong equities markets. Wealth transfer from the Baby Boomers, rising healthcare costs and ongoing technology disruption continue to shape the landscape. Construction remains strong, especially in aging infrastructure—heavy highway, airports, utilities, healthcare and education facilities—as well as warehouse distribution, mixed-use housing and data centers handling the rise of AI. This momentum has helped the economy absorb short-term negative news and extend the cycle. Still, a looming recession is on everyone’s mind. The Baby Boomers and Silent Generation—who’ve seen the Good, the Bad and the Ugly—are exiting leadership roles. Their successors may not be as financially secure or seasoned to navigate a deep downturn. Since the 2007–09 crisis, things have been relatively smooth—unless you’ve been watching the news.
So now what? Younger leaders must act:
Invest in business technology and employees to drive efficiency and accountability. Employees value structured feedback.
Ensure leadership has accurate, timely data. Invest in ERP, accounting, finance and internal controls. PMs and estimators must understand their financial impact.
Track KPIs—debt leverage, working capital, revenue per FTE and PM—and reward conformance.
Address risky contracts early. Get your best PMs involved before losses grow.
Expect aggressive bidding. Use data and teamwork to manage risk. Know your breakeven by understanding fixed, variable and semi-variable costs.
Improve financial operations through long-term budgeting, streamlining billing and change-order approvals, tax strategies and outsourced accounting for efficiency and cost control.
Strengthen relationships with your CPA, bank and surety as your trusted advisors. Implement quarterly meetings for hard close of books, plus regular WIP and job meetings.
Why should contractors consider using a financial technology solution to manage their accounts payable?
Mike Milligan
Director, Marketing and Strategy, GCPay
Autodesk
Accounts payable practices are still largely managed with human capital, often times employing manual processes and tools, and practicing what accounting courses characterize as “double entry” accounting processes. Construction ERP systems are terrific at tracking costs, managing payroll, even forecasting revenue and expenses on future projects. But they don’t manage AP and they certainly can’t facilitate electronic payments to supply chains. This is where technology can help.
There are several payment technologies that construction companies can utilize for vendor payments but most of the currency in AP teams administrate are between themselves and their subcontractors. Oftentimes, subcontractor payments represent more than two thirds of the total costs of a construction project. That’s where technology solutions can really help cut down on time, manual processes, human errors and, perhaps most critical, late payment which can halt the construction on any given project. These technology solutions can integrate directly into construction accounting systems, pull contract data and manage schedules of payments between the GC and their subcontractors. And some even provide electronic payment methods—automated clearing house transactions.
We all know labor shortages represent ongoing challenges for the construction industry, so managing reliable and dependable subcontractors for construction projects is critical. And keeping them paid on time and on budget becomes even more critical in order to maintain those relationships. This where a [fintech] solution like GCPay can really help by providing the seamless integration to construction accounting systems and allowing for easy and efficient exchange of lien waivers, compliance documentation such as COI documents, and preventing overbilling and late payment. It even can eliminate up to a full work day of manual processing of payments to subcontractors.
How can technology help prevent project cost overruns?
Aisha Ali
Chief Operating Officer
Premier Construction Software
Cost overruns are often painted as a project management issue, but in reality, they’re usually rooted in disjointed systems and inconsistent data. When financials, project updates and change orders live in silos, it’s easy to lose track of where a job stands until it’s too late.
Technology helps close that gap. By centralizing budgets, actuals and commitments within a single platform, teams gain real-time visibility into job performance. This enables faster decision-making, tighter cost control and clearer accountability at every level from the field to the back office.
However, visibility alone isn’t enough. Modern technology enforces the financial disciplines that manual processes can’t. For example, Premier Construction Software automatically prevents users from over-committing or misallocating costs when budgets don’t support it. These kinds of built-in safeguards help catch issues early before they affect cash flow or erode margin.
Standardization also plays a key role. When every project follows a consistent structure, from budget entry to approval workflows, it becomes much easier to compare performance, flag anomalies and forecast accurately across the portfolio.
Ultimately, preventing overruns isn’t about working harder—it’s about creating systems that make it easier to work smarter and faster. Technology gives construction businesses the structure, transparency and discipline they need to scale without sacrificing financial control.
What are the main differences between generic accounting software and accounting software made specifically for construction?
Mike Ode
Generic accounting systems may be familiar, but they aren’t built for how construction businesses operate.
Unlike standard businesses with a single profit center, contractors manage multiple job-based profit centers, making traditional, period-based accounting insufficient.
Construction-specific accounting software supports the real-time job cost tracking contractors need. Every transaction—payroll, materials, equipment—is tied to a job, providing detailed cost data throughout the project lifecycle.
That data then powers construction-focused reports like WIP schedules, cost-to-complete projections and cash-flow analysis — tools that help contractors monitor progress, forecast needs and proactively manage financial risk.
Generic platforms also facilitate frequent computation errors, whereas construction-specific software can easily handle industry requirements like tracking retainage, percent-complete invoicing or complex billing formats like AIA progress.
Payroll adds another layer of complexity. Beyond calculating hours worked, contractors must track union dues, prevailing wage rates, multi-state and multi-local tax requirements and compliance reporting.
Construction accounting solutions include payroll processing features that automate these tasks and reduce manual entry, saving time and mitigating risk of noncompliance.
Additionally, these systems often integrate with field tools like mobile time tracking, ensuring accurate data flows directly from the jobsite.
Contractors work in an environment defined by tight margins, long project timelines and constant changes. Generic software struggles to maintain accurate oversight across these variables.
Using construction-specific accounting software provides the visibility, control and precision contractors need to stay on budget and make informed decisions, day after day.
Joel Hoffman
Director, Product Management, Construction
Acumatica
Generic accounting software is designed to handle broad financial tasks like general ledger, accounts payable/receivable and payroll across various industries. However, it often lacks the depth and specificity required for managing the complexities of construction projects. In contrast, construction-specific accounting software—like Acumatica’s Construction Edition—is tailored to meet the unique demands of the construction industry. It integrates core accounting functions with project management tools, enabling real-time tracking of job costs, budgets, contracts, change orders and compliance requirements. This level of integration ensures that all stakeholders—from field crews to finance teams—work from the same data, reducing errors and improving collaboration. Unlike generic systems that create data silos and require manual workarounds, construction ERP solutions centralize data, automate workflows and provide visibility into every aspect of a project. Features such as job-cost accounting, resource allocation and field service management are built-in, allowing contractors to manage labor, materials, equipment and subcontractors efficiently. These capabilities are essential for staying on schedule and within budget in a highly competitive, margin-sensitive industry. Ultimately, while generic accounting software may suffice for basic financial tracking, construction-specific solutions empower firms to operate more strategically and profitably by aligning financial management with operational execution.
What advice do you have for contractors regarding potential cost escalations due to higher tariffs?
Brian Kassalen
Principal, Construction Industry Leader
Baker Tilly
Contractors are in a unique situation where they often deal with a lot of uncertainty in construction projects. Historically, this could occur in areas such as weather, labor shortages or supply-chain constraints. In today’s climate, contractors face an added challenge of navigating the potential impacts on construction projects stemming from the ever-changing world of tariffs.
During his 2024 campaign, President Trump advocated for tariffs as an important aspect of his trade policies. Contractors and the projects they are working on can be especially impacted by tariffs on steel, aluminum, lumber and concrete. Unfortunately for contractors, the imposition of tariffs and the rate at which the tariffs will be imposed has been in a state of constant fluctuation. Tariffs have been implemented, then paused or rolled back, and then implemented again. This makes planning for projects—from estimating project costs to securing materials for projects—an added challenge. Especially so for projects that were already bid but materials have not been procured yet. However, there are things contractors can do to help mitigate the potential risks of cost escalations caused by higher tariffs.
Contractors will need to evaluate contract terms to understand if there are opportunities to revisit cost escalations with project owners. Additionally, contractors can work with their supply-chain partners to identify alternative sources for material sourcing. Lastly, contractors should be proactive in communicating with their project owners and developing a plan with them on potential solutions should tariffs cause increases in material pricing.
What are the key considerations for succession planning?
Phillip Ross
Partner, Leader—Construction
Anchin
Choosing the right succession strategy is one of the most important decisions a construction business owner will make, and each option requires careful planning. Key considerations for succession planning include early preparation, strong leadership team, financial strength, operational efficiency and competitive/market differentiation.
Owners must focus on building a leadership team capable of running the business independently. Mentoring the key people is essential as well as the team understanding all the aspects of the business.
A company’s financial health, demonstrated through profitability, consistent cash flow and a strong balance sheet, is essential, as these factors make the business more attractive to the next owners and allow for greater flexibility in choosing a transition path. Clearly defined market positioning, whether through niche expertise, geographic reach or longstanding client relationships, also enhances a firm’s value and appeal. Operationally, companies with documented processes, strong governance, risk management and advanced internal systems are better positioned for scalability and future success.
Engaging advisors early allows owners to evaluate their succession options and to understand the pros and cons of each. It also enables the owner to decide what their goals are—highest price, legacy, culture or some combination of these. Options could include transferring to the next generation, internal buyouts, ESOPs, private equity investment, or mergers and sales. Each option has distinct benefits and challenges; the right path depends on the owner’s goals. Ultimately, a well-prepared firm commands higher valuations, enjoys more transition opportunities and is poised for continued growth in the future.
What are the biggest benefits of preconstruction planning and subcontractor prequalification for general contractors?
Josh Billiard, CPA, CCIFP
Partner
Plante Moran
Subcontractor prequalification is a nuanced and challenging aspect to ensure effective job performance for prime/general contractors and larger trade contractors. Simply put, an effective subcontractor prequalification process can protect a contractor from a problem before it starts.
When time is short, expected project profitability is thin or subcontractor availability is tight, the general contractor can be tempted to take risks on new/unknown, financially constrained and/or capacity-challenged subs. That said, there is a difference between taking a measured risk on a subcontractor based on knowledge of the risk being present versus flying blind.
General contractors need to first ensure they have an effective subcontractor prequalification program that works for them and, more importantly, they need to follow the program.
Depending on size, best-in-class contractors have a formal prequalification program that can be run entirely by their accounting/finance/preconstruction teams, or they can outsource certain aspects of the program (i.e. financial information accumulation/summarization services provided by third parties, etc.).
Many contractors set limits on new/unknown subcontractors for how many different jobs those subs can work on, along with limits on total subcontracted value on open jobs/open bids. These tactics limit overall exposure if a subcontractor failure occurs.
Many contractors also set requirements dictating when subcontractor bonding (or other protection programs like joint checking) is required.
Contractors need to stay diligent with their prequalification processes, particularly when busy or when a bid is tight from a profitability perspective. Too often, job claims/job non-performance/litigation are the result of poor choices made during subcontractor selection.
How are contractors currently using AI and predictive analytics in their businesses to increase profitability and better manage risk?
Wade A. Sandy
Partner in Charge, Construction and Real Estate
Eide Bailly LLP
Construction companies are increasingly realizing competitive advantages in utilizing AI, particularly in bidding and estimating, project management, and employee recruitment and retention. To effectively implement AI, a company’s technology stack should be scalable, portable and interoperable. Connectivity is essential for pulling the data necessary to train AI models. However, legacy and niche software programs are notorious for siloing and restricting access to data. Construction software often combines the capabilities of multiple-point solutions. Still, different departments within a company may use different solutions to complete similar tasks. The number of subscriptions and software licenses that companies pay for can be shockingly high, and usage and maintenance costs can quickly compound if companies merge or are acquired, with different tech stacks piling atop each other. Understanding what software and processes people use in their day-to-day work and aligning technology with business goals will help a company implement AI more effectively.
How has construction accounting software evolved over the past few years?
Chet Kuchyt
Senior Product Manager, Project Controls
CMiC
Construction accounting has undergone significant transformation in recent years, driven primarily by technological advancement and regulatory changes.
Digital Integration and Automation
In my professional opinion, the most notable shift has been the widespread adoption of cloud-based accounting platforms specifically designed for construction. These systems now seamlessly integrate with project management software, enabling real-time cost tracking, automated job costing and instant financial reporting. Mobile applications have revolutionized field data collection, allowing superintendents and project managers to input costs, time sheets and progress updates directly from jobsites.
Revenue Recognition Evolution
The construction industry has fully adapted to ASC 606 revenue recognition standards, fundamentally changing how contractors account for long-term contracts. This has required more sophisticated systems to track performance obligations and recognize revenue based on project completion percentages rather than traditional billing methods.
Enhanced Analytics and Reporting
Modern construction accounting now emphasizes predictive analytics and business intelligence. Companies can forecast cash flow, identify cost overruns early and make data-driven decisions through advanced reporting dashboards that provide real-time project profitability analysis.
Remote Work Adaptations
The pandemic accelerated the adoption of remote accounting capabilities, with many firms maintaining hybrid models that allow accounting staff to work efficiently from multiple locations while maintaining secure access to financial systems.
Supply-Chain Impact
Recent supply-chain disruptions have necessitated more sophisticated inventory management and cost accounting systems to handle volatile material pricing and availability issues.
These changes have collectively made construction accounting more accurate, efficient and strategically valuable to business operations.
SEE ALSO: CONSTRUCTION FUTURES: JULY 2025 ECONOMIC ROUNDUP
