Every Friday, we select a few articles from the week that we think are worth your time as a construction financial manager (CFM). We look for compelling articles not only about financial topics, but about business, technology, and life, that challenges you to think about your role as a CFM in different ways. We’d love to hear from you about how we’re doing, and to have you join our community by subscribing to receive this weekly post by email. Follow #CFMReview.
Sales Tax for Construction Contractors
Sales tax experts Avalara recently posted a few handy tips about sales tax for construction businesses. I highly recommend reading the article if you are at all responsible for your construction company’s finances and/or taxes.
According to Avalara, some states require contractors to pay sales tax when buying materials (they are treated as customers), while others do not (contractors are considered retailers). This is quite interesting to me, as it speaks to a state’s feelings about who is responsible for financing a project. Avalara advocates that contractors should include sales tax in their bid amounts, so that they are ultimately paid back that amount. Of course, many contractors will tell you that they often don’t have the leverage to pass along those costs.
Credit Policy Template
Our credit policy template is one of Levelset‘s most popular downloads, and is particularly relevant to a construction finance professional. For those of you working in a credit department, your company already has a credit policy, which is defined by the decisions that credit managers and directors make everyday. Whether this policy is established and written down is another question. A credit policy is equally valuable to smaller companies, the only difference being that each individual has a wider range of responsibilities.
A clearly defined, documented credit policy has a number of benefits to construction professionals. It will help you, your department, and your company:
- Hone your goals, mission and values
- Guide and defend your credit decisions
- Measure your performance
- Improve collections and receivables
- Maintain organization and consistency in decision-making
Levelset‘s Credit Policy Template is a great place to get started with creating your own policy. Download and customize it to your company’s needs.