How to Create a Financial Dashboard in QuickBooks: A Comprehensive Guide for Construction Businesses

As a construction business owner or contractor, keeping track of your company’s financial health is crucial for success. QuickBooks offers a powerful tool to help you stay on top of your finances: the financial dashboard. In this guide, we’ll walk you through the process of creating a customized financial dashboard in QuickBooks that caters specifically to the needs of construction businesses.

Why You Need a Financial Dashboard

Before we dive into the how-to, let’s quickly discuss why a financial dashboard is essential for your construction business:

• Quick overview of your financial status
• Easy tracking of key performance indicators (KPIs)
• Improved decision-making based on real-time data
• Better cash flow management
• Easier identification of financial trends and potential issues

Getting Started with QuickBooks

If you haven’t already, sign up for QuickBooks Online. The Plus or Advanced versions are recommended for construction businesses due to their more robust features. Once you’re logged in, follow these steps to create your financial dashboard:

Step 1: Navigate to the Dashboard

From the QuickBooks homepage, click on “Dashboard” in the left-hand menu. This will take you to the default dashboard, which we’ll customize for your construction business.

Step 2: Customize Your Dashboard

Click on “Customize” in the top right corner of the dashboard. This will allow you to add, remove, and rearrange widgets to suit your needs.

Essential Widgets for Construction Businesses

Here are some key widgets you should consider adding to your dashboard:

1. Profit and Loss

This widget gives you a quick overview of your income, expenses, and overall profitability. For construction businesses, it’s crucial to track these numbers regularly to ensure you’re staying profitable on each project.

2. Cash Flow

Construction businesses often deal with large sums of money and long payment cycles. The cash flow widget helps you monitor your incoming and outgoing cash, ensuring you always have enough liquidity to cover expenses and payroll.

3. Accounts Receivable

Keep track of outstanding invoices and customer payments with this widget. It’s especially important for construction businesses to stay on top of accounts receivable to maintain a healthy cash flow.

4. Accounts Payable

Monitor your outstanding bills and upcoming payments to suppliers and subcontractors. This widget helps you manage your expenses and avoid late payment fees.

5. Project Profitability

If you’re using QuickBooks Advanced, you can add a project profitability widget to track the financial performance of individual construction projects.

6. Income by Customer

This widget helps you identify your most valuable clients and spot trends in customer spending.

7. Expenses by Vendor

Track your spending with different suppliers and subcontractors to identify potential cost-saving opportunities.

Customizing Widgets for Construction-Specific KPIs

To make your dashboard even more relevant to your construction business, consider customizing existing widgets or creating new ones to track these important KPIs:

1. Job Costing

Create a widget that compares estimated costs to actual costs for each project. This helps you identify cost overruns and improve your estimating process.

2. Labor Utilization

Track the productivity of your workforce by monitoring billable hours versus total hours worked.

3. Equipment Utilization

If you own construction equipment, create a widget to track usage and associated costs for each piece of machinery.

4. Change Orders

Monitor the frequency and financial impact of change orders on your projects.

5. Bid-Hit Ratio

Track the number of bids submitted versus the number of contracts won to gauge your bidding effectiveness.

Setting Up Alerts and Notifications

QuickBooks allows you to set up alerts for various financial metrics. Here are some useful alerts for construction businesses:

• Low cash balance
• Overdue invoices
• Upcoming bill payments
• Project budget overruns
• Negative profit margins on projects

To set up alerts, go to the “Gear” icon, select “Account and Settings,” then “Advanced,” and finally “Company preferences.” Here you can customize your alert settings.

Interpreting Your Financial Dashboard

Now that you’ve set up your dashboard, it’s important to know how to interpret the data:

1. Look for Trends

Regularly review your dashboard to identify patterns in your financial data. Are certain types of projects more profitable? Are there seasonal fluctuations in your cash flow?

2. Compare to Industry Benchmarks

Use industry benchmarks to compare your performance against other construction businesses. This can help you identify areas for improvement.

3. Make Data-Driven Decisions

Use the insights from your dashboard to make informed decisions about bidding, resource allocation, and financial management.

4. Share with Your Team

Consider sharing relevant parts of your dashboard with project managers and other key team members to improve overall financial awareness and accountability.

Best Practices for Using Your Financial Dashboard

To get the most out of your QuickBooks financial dashboard:

• Update your books regularly to ensure your dashboard reflects the most current data
• Review your dashboard at least weekly, if not daily
• Adjust your dashboard as your business needs change
• Use the insights gained to set and track financial goals for your construction business
• Consider working with an accountant or financial advisor to help interpret the data and make strategic decisions

Troubleshooting Common Issues

If you encounter problems with your dashboard, try these solutions:

• Ensure all transactions are properly categorized
• Check that all bank accounts and credit cards are synced correctly
• Verify that project information is accurately entered
• Clear your browser cache or try accessing QuickBooks from a different browser
• Contact QuickBooks support if issues persist

Conclusion

Creating a financial dashboard in QuickBooks tailored to your construction business is a powerful way to stay on top of your finances. By customizing widgets, tracking construction-specific KPIs, and regularly reviewing your dashboard, you’ll gain valuable insights that can help drive your business forward. Remember, your financial dashboard is a tool to support your decision-making – use it in conjunction with your industry expertise and business acumen to achieve the best results for your construction company.

With practice, you’ll find that your QuickBooks financial dashboard becomes an indispensable tool for managing your construction business’s finances. Stay proactive, keep your data up-to-date, and use the insights gained to build a stronger, more profitable construction company.