The accounts were filed on time.
Tax was minimised properly.
HMRC was happy.
The accountant genuinely thought he'd done a good job.
Then Balfour Beatty's procurement team reviewed the same accounts.
And pulled £500K of work.
Not because the numbers were wrong. They were filed correctly.
But because "good for HMRC" and "good for winning contracts" are two completely different standards.
And this accountant only understood one of them.
I'm Writing About This Again
I released a video this week about why most accountants don't understand construction finance.
It's something I've been seeing for years – accountants who are brilliant at tax compliance but don't grasp construction-specific finance: tracking WIP across multiple projects, managing CIS cash flow challenges, understanding retention impacts, and presenting accounts that win work with main contractors.
→ Watch: Why Your Accountant Doesn't Understand Construction (13 minutes)
Then on Thursday, I had a call that proved every single point.
A £2 million construction business. Two directors running both construction and utilities divisions. Solid team. Growing fast.
They'd just lost £500K of work with Balfour Beatty.
Not because of the quality of their work. Not because of their pricing.
Because when Balfour Beatty's procurement team reviewed their accounts, the numbers told the wrong story.
The video explains the pattern. The LinkedIn post shared the real-world cost. And now I'm writing about it again with the full breakdown.
Not because I'm short on content. But because this pattern is costing construction businesses millions – and most don't realise it until it's too late.
What Balfour Beatty Actually Saw
In the video, I talked about the three core reasons accountants fail construction businesses:
Thursday's call? All three were in play.
The accountant had done his job from an HMRC perspective. Tax was minimised. Profit was low. The books were filed correctly.
In the director's words: "He'd cooked the books a bit, which is fair enough when you're just a builder."
But they weren't just builders anymore. They were turning over £2 million. Chasing six-figure contracts with Tier 1 contractors.
And when Balfour Beatty's procurement team reviewed the accounts, here's what they saw:
Current liabilities: Over £300K
Current assets: Just under £300K
Net working capital: NEGATIVE
For context, the previous year they'd had a positive working capital position of around £15K.
They'd worsened by nearly £20K year-on-year.
Current ratio: 0.99
Translation: For every £1 they owe in the next 12 months, they only have 99p coming in.
No buffer. No resilience. No room for a late payment.
The procurement team's conclusion?
"You look like you're over-trading. We can't give you more work."
£500K of contracts: gone.
The Counterintuitive Bit
Here's what makes this even more frustrating:
Their cash had actually increased from under £10K to over £20K.
Their retained earnings had grown from under £20K to nearly £50K.
Their revenue was up significantly.
By most measures, they were doing well.
But their liabilities grew faster than their assets.
Classic over-trading: more revenue, more activity, less resilience.
From a procurement perspective, this screams: "If we give them more work with 60-day payment terms, they'll struggle."
That's why Balfour Beatty pulled the plug.
What "Commercially Minded" Actually Means for Construction
Here's what most construction business owners miss:
When you're turning over £200-500K, your accountant's job IS to minimise tax. You're building. You're on the tools. You need every penny.
But somewhere between £500K and £1 million, something shifts.
You're no longer just doing the work. You're winning the work.
And the people deciding whether to give you that work – procurement teams, finance directors, Tier 1 contractors – they're reading your accounts.
Not for HMRC compliance. For commercial confidence.
They want to know:
If your accountant doesn't understand construction finance – the WIP tracking, the CIS implications, the retention impacts, the project costing – then every set of accounts they file could be costing you the next big opportunity.
What Tier 1 Contractors Actually Look For
Here's what gets checked when a procurement team reviews your accounts:
1. Current Ratio (Working Capital)
Current Assets ÷ Current Liabilities
The business I spoke with on Thursday? 0.99.
2. Retained Earnings Trajectory
Not just profit this year. Growth year-on-year.
Shows stability and reinvestment in the business.
3. Cash Position vs Monthly Costs
Minimum 2-3 months of operating costs.
Buffer against payment delays and project overruns.
4. WIP Reporting
Shows you track project profitability in real-time.
Proves you understand your margins and have financial control.
Your current accountant might not even know these metrics exist.
Because they've never had to explain them to a procurement team.
Want to Know Where You Stand?
If you're turning over £500k+ and chasing contracts with main contractors, your accounts need to tell the right commercial story.
I've created a Construction Finance Health Check – a simple assessment that shows you exactly where your financial position would raise red flags with procurement teams.
Get Your Free Health Check Here
Takes 5 minutes. Shows you what Tier 1 contractors see when they review your books.
Two Types of Accountants
There are two completely different types of accountants:
The Tax Accountant (Perfect for £200-500K)
The Commercial Construction Accountant (Essential for £1M+)
Most construction businesses outgrow the first type around £500K-£1M.
The dangerous bit?
You don't realise it until you lose a contract.
The Questions to Ask
If you're still with the accountant who did your books when you were a one-man band, and you're now chasing £100K+ contracts with proper main contractors...
Ask yourself:
✓ Do they prepare management accounts, or just year-end?
✓ Do they track WIP by project?
✓ Do they understand what procurement teams look for?
✓ Could they explain your working capital ratio right now?
✓ Do they call you before problems appear, or after?
If the answer to any of those is "no" – or worse, "what's that?" – you're at risk.
The question isn't whether you can afford a commercial accountant.
It's whether you can afford to lose the next £500K opportunity because your current one doesn't understand construction.
The Bottom Line
The business I spoke with on Thursday has a solid operation. Good team. Good clients. Good growth trajectory.
They just had the wrong type of accountant for where they are now.
What worked at £300K is actively costing them money at £2 million.
If you're in that £1-3 million range and still getting annual accounts with no monthly visibility, no cash flow forecasting, and no WIP tracking...
You're one procurement review away from the same problem.
When your books tell the real story, clients see the business you've actually built.
Make sure yours are telling the right one.
P.S. The full video breakdown is linked above – I walk through all three reasons accountants fail construction businesses and what "commercially minded" actually looks like in practice. Worth 13 minutes of your time if you're chasing £100K+ contracts.
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