Real Estate

CAPITAL OUTLAY FOR THE GENERAL CONTRACTOR

     General Construction is one of the most labor and capital intensive industries anywhere in the world. The General Contractor is the one who oversees general construction projects. A such, he must have a labor pool of trained and skilled workers like masons, carpenters, painters, as well as professional design architects, field engineers, and other construction allied services like electricians and mechanical technicians. Financial capital is, likewise, a necessity to a general contractor. Undertaking a public construction project entails the acquisition of tools and equipment, purchases of materials through credit or cash, labor wages, and consultancy fees, payment of permits and licenses, and other contingent expenses. Most of the time, general contractors engage in Mortgage Deals to help them finance construction projects, be it for revolving funds for operations or capital outlay to acquire tools, equipment, and motor vehicles for mobility and deliveries.

Construction tools and equipment carry with them high depreciation costs in their normal wear and tear usage. Project construction estimates use depreciation as one cost account in all estimate bids submitted by general contractors. It’s good practice to place tools and equipment financial account entry into zero book value upon completing each project, though they can still be of use. Upon estimation for a new project, an original capital outlay is approximated either for actual acquisition or maintenance reconditioning of existing ones. At this time, the GenCon (general contractor) will determine whether his present equity is enough or that he needs an infusion of additional capital through a Mortgage Broker.

All kinds of businesses usually do financial sourcing from Mortgage Lenders; a general construction company is no exception. More so among individual general contractors whose revolving capital, net worth, and assets are relatively limited compared to the actual project costs they endeavor to accomplish. To illustrate, a general contractor can finish a $1,000,000.00 project with only a Fifty Thousand Dollar net worth with professional personnel, quality craft, and sound financial management. Progress billings from the project, trade credit lines for direct materials, and additional capital for contingencies from Mortgage Deals can already lend financial support to any project of whatever size.

It is best to engage a Mortgage Broker at the start of each project. The latter’s work as a part-time financial consultant for the general contractor is part of his job; in fact, the Mortgage Advisor will appreciate it. The general contractor will be able to receive sound advice, not only given a particular project but will also show how his own company can grow in each project. For example, a capital outlay for the acquisition of a delivery vehicle, the books will show almost zero-entry after several projects; however, the car is still actually there given proper maintenance. The more plans he will have means more capital outlays he needs to operate, which will eventually increase his net worth—a very healthy way to do business. The importance of a mortgage lender Advisor can not be discounted in the financial management of any business enterprise this site.

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