The importance of accurate builder estimates for your construction business

The Importance of Accurate Builder Estimates for Your Construction Business

By Matthew Roy

The quality of a construction estimate makes or breaks your profit margin and customer experience before the job even starts, which is why accurate estimates are so important. Unfortunately, it’s easy for contractors to get caught up in existing work and leave little time for creating new estimates. Throwing together a sloppy estimate, or worse, a verbal agreement, on a potential new project can often lead to scenarios worse than not bidding in the first place.

This comprehensive guide delivers all the knowledge you need to create accurate builder estimates. Additionally, it includes information on how to improve your estimating process with digital estimating tools and what to look for in estimating and payment software. 

The True Cost of Inaccurate Estimates

Inaccurate estimates cause problems for both you as the business owner and your client. On the business side, you may underestimate the cost or duration of a project when throwing together an estimate. As a result, you will either have to take a loss on the work or deliver bad news to your customer. Poor-intentioned contractors may even choose to sacrifice quality to get the job done; however, this route can quickly lead to numerous callbacks to fix substandard work and may even result in the downfall of your company.

Another problem with vague estimates is not clearly indicating the scope of work. Your client may assume something is included only to be told it isn’t, causing distrust that affects repeat business and can ruin a reputation. Such conflict is easily avoided if you take the time and use the proper tools to develop an accurate estimate and set your project up for success from the start.

Key Components of a Detailed Contractor Estimate

While the exact details to put in a contractor’s estimate may vary depending on your company and project type, include the following components at minimum to ensure a complete and accurate estimate. Also, use clear, understandable language as you write your estimate so the client fully comprehends the cost and scope.

Note: Don’t forget to consider overhead costs and profit margins as you calculate the estimate. However, these calculations are typically done on the backend and are not explicitly stated in the customer-facing estimate.

How Digital Builder Estimates Improve Your Business

Creating a detailed, accurate estimate starts with having the right tools and procedures in place. Digital estimating tools allow contractors to set up the necessary framework for streamlining the estimating process and producing an accurate estimate every time.

Digital builder estimating software provides the following benefits for contractors:

• Improved estimate accuracy: By creating a detailed line-by-line estimate and including the necessary notes to explain your estimate, errors and omissions are much less likely. Once an estimate has been refined, it can be used as a template for future similar projects.

• Better client satisfaction: A digital estimate sets the project off on the right foot. The client clearly understands the scope of work and the expected costs, leading to fewer disputes or misunderstandings.

• Saves time and resources: Creating estimates and requesting payments is a much quicker process with a digital tool. Once you get the hang of your new digital workflows, you can expect to save time and better utilize your resources elsewhere.

• Enhanced professionalism: Consumers and businesses today increasingly expect fast, simple estimates. Digital estimates are the professional, modern approach to estimating that can make your business stand out.

• Simplifies record-keeping: Using the same digital tool for your estimates, invoices, payments, and other project documents makes filing taxes, budgeting, and managing your finances that much easier.

• Improved cash flow: Digital estimates can quickly be turned into invoices, improving the turnaround time between finishing a project, receiving compensation, and improving your cash flow. Giving your clients an easy way to pay reduces the number of late or missed payments.

  
  

Essential Features of Builder Payments and Estimating Software

No two estimating tools are the same. Improving the financial management of your business starts with selecting a payment and estimating software that meets your needs. Some tools may have too many features that make using the app more complicated than necessary, while others may only meet some of your expectations.

Important features to look out for when choosing digital invoicing and estimating software for contractors include:

• User-friendly interface: The whole point of digital financial management software for your business is to make your life easier. The app’s interface should be intuitive and straightforward so tasks are easy to check off your list.

• Seamless financial workflow: Your digital estimating tool should deliver a seamless financial workflow. With just the click of a button, you should go from setting up estimates to sending invoices to receiving builder payments.

• Accurate calculations: Any financial software for contractors should make it easy to calculate totals and taxes, minimizing any errors in billing.

• Integration with other tools: Builder estimates tools are more powerful when integrated with other applications, such as QuickBooks accounting software. Ensure the software you select is compatible with the other tools you rely on.

• Affordable cost: Choose financial management tools that fit your needs and budget. Don’t get caught overspending on features you don’t really need. Some offer free estimates and only charge a small transaction fee on payments.

  
  

FlumePay is the Affordable Digital Estimating and Invoicing Tool for Contractors

When searching for the best accounts payable software for your contracting business, consider checking out FlumePay. With Flume, you can easily send detailed and professional free estimates to your clients and automatically convert approved estimates into invoices. The streamlined workflow helps you get your deposits faster, start jobs sooner, and delight your customers.

Flume is an intuitive and easy-to-use app and web interface that makes payments and financial management a breeze, with monthly plans ranging from free and pay-as-you-go to $25 per month for all essential features. If you have any questions or concerns about getting started, Flume's dedicated support team is always available to help out.

Simply sign up with your email address to start transforming your company's estimating process and boosting your bottom line.