What to Look for When Hiring a New Construction Accountant

Hiring the right construction accountant is crucial for the financial health and growth of your construction company. Unlike general accountants, a construction accountant must have specialized knowledge and experience to handle the unique challenges of the construction industry, such as job costing, project-based accounting, and compliance with industry regulations. Here’s a comprehensive guide on what to look for when hiring a new construction accountant. 

Construction Accountant Qualifications 

When hiring a construction accountant, it’s essential to ensure they have the right qualifications to meet the unique demands of the construction industry. The ideal candidate should have a combination of formal education, relevant certifications, and practical experience. 

1. Educational Background 

A bachelor’s degree in accounting, finance, or a related field is typically required. For higher-level positions, a master’s degree in accounting or a related field, such as a Master of Business Administration (MBA) with a focus on accounting, can be beneficial. 

2. Professional Certifications 

Certifications such as Certified Public Accountant (CPA) or Certified Construction Industry Financial Professional (CCIFP) are strong indicators of a candidate’s expertise in construction accounting. These certifications require a deep understanding of accounting principles, financial management, and industry-specific issues. 

3. Practical Experience 

Experience in the construction industry is invaluable. Look for candidates who have worked with construction companies before and understand the unique challenges of job costing, project-based accounting, and compliance with industry regulations. 

Common Construction Accounting Roles 

In construction accounting, there are several key roles, each with specific responsibilities: 

1. Construction Accountant 

The construction accountant is responsible for managing the financial records of construction projects, ensuring accuracy in job costing, and maintaining compliance with tax laws and regulations. 

2. Project Accountant 

A project accountant focuses on the financial management of specific projects, tracking costs, managing budgets, and ensuring that the financial aspects of the project are on track. 

3. Cost Accountant 

Cost accountants specialize in tracking and managing the costs associated with construction projects. They ensure that all costs are accurately recorded and provide insights into cost control and reduction strategies. 

4. Controller 

The controller oversees the entire accounting department, ensuring the accuracy of financial statements, managing accounting staff, and providing strategic financial insights to company leadership. 

5. Chief Financial Officer (CFO) 

The CFO is responsible for the overall financial strategy of the company, including managing financial risks, planning for growth, and ensuring that the company’s financial operations align with its long-term goals. 

What to Look for in a Construction Accountant 

1. Industry-Specific Experience 

One of the most critical factors to consider is the candidate’s experience in the construction industry. Construction accounting is vastly different from other industries due to the complexity of job costing, project tracking, and revenue recognition. An accountant with construction experience will be familiar with these processes and will know how to manage them effectively. Look for candidates who have worked with companies similar to yours in size and scope, as they will be more attuned to the specific needs and challenges your business faces. 

2. Understanding of Job Costing 

Job costing is at the heart of construction accounting. It involves tracking all costs associated with a specific project, from labor and materials to overhead and equipment. A skilled construction accountant should be proficient in job costing techniques and tools, ensuring that every project is accurately tracked and reported. They should also understand how to allocate indirect costs appropriately and how to use job costing data to forecast project profitability and inform decision-making. 

3. Proficiency with Construction-Specific Software 

The right construction accountant should be proficient in using industry-specific accounting software. Familiarity with software like QuickBooks Online for Contractors, Sage 300 CRE, CMiC, or Foundation Software can be a significant advantage. They should be able to integrate these tools with your existing systems to streamline financial processes and improve accuracy. Additionally, their ability to leverage these tools for detailed reporting and analysis can provide valuable insights into your business operations. 

4. Strong Knowledge of Construction Tax Laws and Regulations 

The construction industry is subject to numerous tax laws and regulations that vary by state and project type. A qualified construction accountant should have a thorough understanding of these regulations, including sales tax, payroll taxes, and contractor licensing requirements. They should also be aware of the tax implications of different contract types, such as fixed-price, cost-plus, and time-and-materials contracts. Their expertise in navigating these complexities can help you avoid costly penalties and ensure compliance. 

5. Experience with Project-Based Accounting 

Project-based accounting is essential in the construction industry, where each project is treated as a separate entity. Your construction accountant should have experience managing project-based financials, including tracking revenue and expenses by project, managing change orders, and handling project closeout processes. They should be able to produce accurate, timely reports that reflect the financial health of each project, helping you stay on top of budgets and timelines. 

6. Ability to Handle Complex Billing Structures 

Construction projects often involve complex billing structures, including progress billing, retention, and multiple billing rates. A skilled construction accountant should be adept at managing these complexities, ensuring that invoices are accurate and timely, and that cash flow is properly managed. Their ability to handle intricate billing scenarios will help maintain healthy financial relationships with clients and subcontractors. 

7. Attention to Detail and Organizational Skills 

Construction accounting requires meticulous attention to detail due to the numerous variables involved in each project. A top-tier construction accountant will be highly organized, capable of managing multiple projects simultaneously while ensuring that all financial data is accurate and up to date. Their organizational skills will be critical in maintaining the integrity of your financial records and ensuring that nothing falls through the cracks. 

8. Excellent Communication Skills 

Communication is key in construction accounting, as the accountant will need to work closely with project managers, contractors, and company leadership. They should be able to explain complex financial concepts in clear, straightforward terms, ensuring that everyone involved in the project understands the financial implications of their decisions. Their ability to communicate effectively will facilitate better collaboration and decision-making across the company. 

9. Problem-Solving and Analytical Abilities 

Construction projects are dynamic, and unexpected financial challenges can arise at any time. A construction accountant must be a strong problem solver, capable of analyzing financial data to identify issues and develop solutions quickly. Whether it’s addressing cost overruns, managing cash flow issues, or navigating changes in project scope, their analytical skills will be essential in keeping projects on track financially. 

10. Cultural Fit and Alignment with Company Values 

Finally, consider the cultural fit of the candidate within your organization. Constructiom accounting is not just about numbers; it’s about understanding the unique culture and values of your company. Look for someone who aligns with your company’s mission and who will work well with your team. A good cultural fit can lead to better collaboration, increased job satisfaction, and a more positive work environment. 

Hiring vs. Outsourcing: The Benefits of Outsourcing 

When it comes to managing your construction company’s finances, you have two primary options: hiring an in-house accountant or outsourcing your accounting needs to a specialized firm. Each option has its pros and cons, but outsourcing offers several distinct advantages. Take a deeper dive into the benefits How Outsourcing Construction Accounting Can Benefit Your Business.

1. Cost Efficiency 

Outsourcing can be more cost-effective than hiring a full-time in-house accountant, especially for small to mid-sized construction companies. You avoid the costs associated with salaries, benefits, and ongoing training.  

2. Access to Expertise 

Outsourcing your accounting needs gives you access to a team of experts with specialized knowledge in construction accounting. These professionals are up-to-date with the latest industry trends, regulations, and technologies, ensuring your financial management is always top-notch. 

3. Scalability 

As your business grows, your accounting needs may change. Outsourcing allows you to scale your accounting services up or down as needed, without the hassle of hiring or laying off staff. 

4. Focus on Core Business 

By outsourcing your accounting, you can focus more on what you do best—running your construction projects. This allows your team to concentrate on core business activities, leaving the complex financial management to the experts. 

Key Points 

• Industry Experience: Ensure your accountant has experience specific to the construction industry. ‍
• Job Costing Expertise: Proficiency in job costing is crucial for accurate project financials. 
• Software Proficiency: Familiarity with construction-specific accounting software is a must. 
• Regulatory Knowledge: Deep understanding of construction tax laws and regulations is essential. 
• Project-Based Accounting: Ensure they have experience managing finances on a project basis. 
• Complex Billing Structures: Ability to manage intricate billing scenarios. 
• Attention to Detail: Organizational skills are crucial for maintaining financial integrity. 
• Communication Skills: They must be able to convey financial information clearly. 
• Problem-Solving Skills: Look for someone who can analyze and resolve financial issues quickly. 
• Cultural Fit: Ensure the candidate aligns with your company’s values and culture. 

Frequently Asked Questions About Hiring a Construction Accountant

What qualifications should construction companies look for when hiring an accountant?

Construction companies should look for candidates with specific qualifications including a bachelor's degree in accounting, finance, or related field (master's degree preferred for higher-level positions), professional certifications such as CPA or CCIFP (Certified Construction Industry Financial Professional), and practical experience in the construction industry. The ideal candidate should understand unique construction challenges like job costing, project-based accounting, and industry regulations. They should have worked with construction companies similar in size and scope to understand specific business needs. Additionally, candidates should demonstrate proficiency with construction-specific accounting software, knowledge of construction tax laws and regulations, and experience with project-based financial management including change orders and project closeout processes.

What are the key differences between various construction accounting roles?

Construction accounting encompasses several specialized roles with distinct responsibilities: Construction Accountants manage financial records of construction projects, ensure accuracy in job costing, and maintain compliance with tax laws and regulations. Project Accountants focus on financial management of specific projects, tracking costs, managing budgets, and ensuring financial aspects stay on track. Cost Accountants specialize in tracking and managing project-associated costs, ensuring accurate recording and providing cost control insights. Controllers oversee the entire accounting department, ensure financial statement accuracy, manage staff, and provide strategic financial insights to leadership. CFOs handle overall financial strategy including risk management, growth planning, and ensuring financial operations align with long-term goals. Understanding these distinctions helps companies hire the right expertise level for their specific needs.

Why is construction industry experience so important for accounting professionals?

Construction industry experience is crucial because construction accounting differs significantly from other industries due to complex job costing requirements, project tracking methodologies, revenue recognition challenges, and specialized compliance needs. Experienced construction accountants understand percentage-of-completion accounting, retention management, Work-in-Progress reporting, change order processing, and subcontractor management. They're familiar with industry-specific software, understand construction contract types (fixed-price, cost-plus, time-and-materials), and know how to handle complex billing structures including progress billing and retention. Without construction experience, accountants may struggle with project-based accounting, job cost allocation, and industry-specific regulations, potentially leading to inaccurate financial reporting and compliance issues that could significantly impact business operations and profitability.

What construction-specific software proficiency should accountants have?

Construction accountants should be proficient in industry-specific accounting software that handles unique construction requirements. Key software includes QuickBooks Online for Contractors for smaller companies, Sage 300 CRE for mid-sized operations, CMiC for larger enterprises, and Foundation Software for comprehensive construction management. They should understand how to integrate these tools with existing systems to streamline financial processes and improve accuracy. The accountant should be able to leverage these tools for detailed job costing, project tracking, WIP reporting, retention management, and comprehensive financial analysis. Their software expertise should extend to generating construction-specific reports, managing project budgets, tracking change orders, and providing real-time insights into project profitability and company financial health.

What are the most important technical skills for construction accountants?

Essential technical skills include mastery of job costing techniques to track all project-related costs including labor, materials, overhead, and equipment; proficiency in project-based accounting treating each project as a separate entity; expertise in complex billing structures including progress billing, retention, and multiple billing rates; understanding of construction tax laws and regulations varying by state and project type; experience with revenue recognition methods appropriate for construction contracts; ability to manage change orders and their financial implications; skills in cost allocation and indirect cost distribution; proficiency in cash flow management and forecasting; and expertise in financial reporting specific to construction including WIP reports, project profitability analysis, and compliance reporting. These technical skills ensure accurate financial management and informed decision-making.

How important are soft skills and cultural fit when hiring construction accountants?

Soft skills and cultural fit are extremely important because construction accountants must collaborate effectively with project managers, contractors, and company leadership. Essential soft skills include excellent communication abilities to explain complex financial concepts clearly, strong problem-solving and analytical skills to address unexpected financial challenges, meticulous attention to detail for managing multiple projects simultaneously, and organizational skills to maintain financial record integrity. Cultural fit ensures the accountant understands and aligns with company values, works well within the team dynamic, and contributes to a positive work environment. Good cultural fit leads to better collaboration, increased job satisfaction, improved retention, and more effective communication across all levels of the organization, ultimately supporting better financial outcomes and business success.

What are the advantages of outsourcing construction accounting versus hiring in-house?

Outsourcing construction accounting offers several advantages: Cost efficiency by avoiding full-time salaries, benefits, and ongoing training expenses; access to specialized expertise with up-to-date industry knowledge, regulations, and technologies; scalability to adjust services based on business growth without hiring or layoff complications; ability to focus on core business activities while leaving complex financial management to experts; immediate access to experienced professionals without recruitment time; reduced risk of employee turnover disrupting financial operations; and access to advanced software and systems without additional investment. Outsourcing is particularly beneficial for small to mid-sized construction companies that need expert accounting support but may not have enough volume to justify full-time specialized staff or the budget for comprehensive in-house accounting departments.

What red flags should construction companies watch for when evaluating accounting candidates?

Construction companies should watch for several red flags: lack of construction industry experience or understanding of industry-specific challenges; inability to explain job costing concepts or project-based accounting principles; unfamiliarity with construction accounting software or resistance to learning new systems; limited knowledge of construction tax laws and regulations; poor communication skills or inability to explain financial concepts clearly; lack of attention to detail evidenced through resume errors or interview responses; unrealistic salary expectations that don't align with experience level; gaps in employment history without reasonable explanations; poor references from previous construction employers; and misalignment with company culture or values. Additionally, be cautious of candidates who seem overqualified and may leave quickly, or those who cannot provide specific examples of handling construction accounting challenges.

What RedHammer Can Do for You

At RedHammer, we specialize in construction accounting and understand the unique challenges that come with it. Whether you’re looking to hire a new accountant or considering outsourcing your accounting needs, we can help: 

• Tailored Accounting Services: We offer services that are customized to meet the specific needs of your construction business. 
• Expert Consultation: Our team of experienced professionals can provide expert advice on your financial management and help you make informed decisions. 
• Scalable Solutions: Our services are scalable, allowing you to adjust your accounting needs as your business grows. 
• Compliance and Accuracy: We ensure that your financial records are accurate and comply with all relevant regulations. 
• Cost-Effective Solutions: Outsourcing with RedHammer can save you money while providing you with access to top-tier accounting expertise. 

Conclusion 

Choosing the right construction accountant is vital for your company’s financial health. Look for candidates with industry-specific experience, job costing expertise, and familiarity with construction accounting software. Consider the benefits of outsourcing, such as cost savings, access to specialized knowledge, and the ability to scale services as your business grows. 

Whether hiring in-house or outsourcing, making an informed decision will help ensure your company’s financial success.