For general contractors (GCs), maintaining an accurate view of financial health is crucial, especially when managing multiple projects and balancing expenses. However, one common challenge is keeping track of checks issued but not yet cashed, which creates a gap between the actual bank balance and the pending financial obligations.
This processing period, when checks are in transit, can make it difficult for GCs to track their true financial standing by simply looking at bank statements. This becomes even more complicated when there are numerous checks issued at once, increasing the risk of financial miscalculations and potentially leading to cash flow issues.
Imagine Mark, a project manager at a mid-sized GC firm that handles multiple commercial and residential projects at a time. Mark’s team regularly issues checks for subcontractor payments, material orders, and permit fees. One week, Mark issued 20 checks worth a total of $50,000. By the time the checks were cashed, the firm’s bank balance looked deceptively healthy, showing a surplus.
Trusting the bank statements, Mark approved additional project expenditures, only to find out later that half the issued checks had been cashed simultaneously, leaving their actual cash flow in a far more precarious state than he realized. This unexpected hit to their balance strained their financial resources, causing delays in new material orders and putting ongoing projects at risk.
The core of the issue lay in the disconnect between bank statements and the actual pending obligations from checks in the processing phase. Without a system that clearly tracked issued checks and funds on hold, Mark struggled to make informed financial decisions, which threatened the firm’s ability to manage project cash flow and stay within budget.
With APARBooks, Mark found the solution he needed. The platform’s bank reconciliation function provided real-time tracking of the total balance, funds on hold, and amounts in transit to the bank. Each transaction, including checks in the processing phase, was listed under its corresponding status, allowing Mark to see exactly which payments were still pending and what their impact would be on the overall financial position. This enabled Mark’s team to accurately calculate their available funds and maintain better control over cash flow, avoiding overspending and ensuring that all project expenses were covered without surprise shortfalls.
