Part 3: Financial tracking.

The business of surveying, like any business, includes financial aspects or accounting. We exchange our services for fees. These fees require collection and tracking. Having an understanding of the accounting is important to all who are involved in a business. The people who will use this accounting of your business will range and vary based on your structure. Stockholders and investors—or even you as the sole proprietor—will review the financial accounting. Managerial accounting reports the activity to the managers within the organization. This may not be the most enjoyable aspect of our work but it is one of the most critical. Without it, why do business?

Understanding Business

My 14 years in the surveying and engineering practice has exposed me to various levels of the business. Starting out as a rodman and gunner, all I cared about was getting my check each week. Eventually, as I evolved in my surveying career, what I cared about and valued did also. As a manager of a department full of rodmen and gunners, I struggled to remember that what they cared about most was getting their checks. I recall what aspect of my career changed me from simply caring about my check to caring about the organization: when my supervisor sat me down to explain—in a crude way—the financing of a project. It was at this point that I realized my check, however important to me, was not the highest priority to my employer. Employees are an expense to an employer. Without this expense—without employees—the company struggles to exist. In order for me to get that check and to continue receiving other checks, each project needed to be successful in a financial manner as well as in quality. The best way to do this is to work as correctly and as efficiently as possible. Years later, I had to sell this notion to my employees.

Involving Employees

I have found that including an employee in the financial management of a project helps him or her to be efficient. However, it is probably the most difficult thing to do. Employees often feel that they are already performing efficiently, so when you approach this subject, use caution. You don’t need to reveal every expense, but explaining how hours are budgeted and what performance levels need to be will help employees get focused. Eventually, if employees have the value you first perceived in them, they will reward you with efficient and accurate work. This process gives them the sense of ownership on a project that can inspire them to advance in their careers. In some cases, a reward is effective. You would be surprised at how much more support you get by buying a simple lunch or dinner.

We have all had to buy a project at one time or another. Admit that to the employee. If you can’t provide realistic numbers for a project, let the employee know. They will help you. I have found that an open relationship with employees pays dividends, while beating them up when they don’t hit your unrealistic marks drives them away. They will be the ones performing on your behalf; you need them on your side. Ask them what they think it will take for a project and use that knowledge in developing a budget. This will give them a level of ownership. However, it is also your role to explain that if they miss that mark, they better be ready to explain why and improve upon it in the future. It is key to explain at an early stage that responsibility has its costs.

Involving your employees im business matters is a first and critical step. If they do their job, you need to do yours. As a manager or owner, you need to track the expenditures and receivables on a project. In my first few months of management, I assumed that someone in the accounting department was doing this for me. This was my mistake. You cannot expect a person removed from the project to track it for you. After a rude awakening and several weeks of catching up, I took this under my charge. Several months passed and I had my accounting in order, but then I realized my marketing had slipped and if I did not do something, I would have crews staring at me eight hours a day. I realized I needed help. I needed to place someone in the accounting role that I would be able to communicate with and who would communicate with the accounting department. This would provide me with a link to that area of the business, leaving me the freedom to deal with the everyday matters of the survey world that did not stop and wait for me to catch up. A most critical item to pay attention to when addressing the finances is that the people in the accounting department have a job. Their job is to efficiently maximize the profit for the organization. Maximization of profit sometimes, unfortunately, has little to do with efficiency or quality. Approach these matters in a way that will allow calmer heads to prevail, and all parties will walk away feeling good about the situation.

Prioritizing Accounting

What procedures for financial tracking can be followed if you are a small business without the resources or overhead of a large corporation? This will depend upon your work volume and payroll size. For most small surveying shops, an independent accountant or bookkeeper on a quarterly basis can do this important work. This keeps overhead down and provides you with a fresh set of eyes to analyze what you have done, and to hopefully catch any oversights or errors.

We have discussed the beginning and end of the tracking, but how did we get there? The only wrong way is to not do anything. You need to keep all records of expenses and receivables. This can be done by the traditional method of a general ledger. Today’s technology provides us with many software programs to help accomplish this internal tracking. When you are choosing this method, it is best to let the person who will be doing the work choose the program. If you have a program in place, hire a person who understands that program. In companies both large and small, management trends change with employees because they could not or would not operate a certain system or software. Hold your ground; it is inexpensive to train people, but it is very expensive to buy new software each time.

Your business as a whole should operate on ethics, but the accounting of it should be of the highest level. The people you use in these roles to assist you in this tracking should be chosen wisely. As owners and managers, we need to keep in mind that their role in the business is the money and its management. We need to apply their management to our everyday business of surveying. The two may not always meet in the middle, but if done correctly and effectively, they will complement each other.

Disclaimer: Neither the author nor POB intends this column to be a source of sound accounting advice for surveyors or their clients. If you have a specific accounting issue, the best source of advice is a certified accountant.