Bookkeeping Tips for Tracking Multiple Active CDs in a Contracting Company

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As cash reserves accumulate through a successful contracting business, parking portions into certificates of deposit (CDs) offers low-risk interest gains. However, keeping records organized across several active certificates of deposit poses complexities differently than simple savings accounts if not handled systematically. This article provides construction contractor bookkeeping best practices enabling diligent oversight over certificates of deposit terms, interest posting, automatic renewals, and maturity withdrawals efficiently through the construction industry’s unpredictable cash flows too.

Opening and Monitoring CD Accounts 

When opening new CD accounts—whether online, by phone, or in-person—the bookkeeper first records each certificate of deposit’s full descriptive details within the company’s accounting records. This includes the issuing bank name, purchase date, original deposit amount, stated interest rate percentage, and maturity date. Additionally, noting key signers’ names, automatic renewal clauses, and interest payment schedules facilitates smooth principal/earnings tracking long-term.

CD interest posting frequencies vary from monthly to annually depending on individual account terms set at origination. Wise bookkeepers watch for interest due dates per bank statements, recording any interest earned payments towards the appropriate CD line items promptly according to construction contractor bookkeeping standards. Spotting unpaid amounts alerts banks to quickly solve minor posting errors protecting hard-earned interest dollars.

Projecting CD Renewal & Maturity Cycles

While banks automatically roll over many CDs upon maturity, deliberately projecting upcoming renewals/maturities aids cash flow forecasting critical within contracting industries. Bookkeepers’ calendar reminder alerts weeks ahead prompting early reconsiderations over continuing CD reinvestment versus transferring proceeds addressing short-term obligations instead according to company strategies. Forethought streamlines interest-yielding asset management amidst fluctuating operations too.

Occasionally CDs are redeemed partially or fully to fund new equipment, materials or other outlays as construction schedules demand. Correctly crediting/debiting affected CD and cash accounts maintains ledger accuracy during such flexible usages as well-run contracting firms require. Principal withdrawals diminish balances affecting interest earnings, emphasizing careful documentation practices upholding orderly financial reporting standards expected within the industry.

Reconciling CD Accounts Monthly

Just as savings statements reconcile readily, periodic CD account verifications protect hard-earned balances and interest monies too by double-checking bank records aligned using construction contractor bookkeeping procedures. Matching principal balances, current interest rates, maturities plus activity confirms all certificates performing as intended—exposing rare bank errors before accumulating harmfully if undiscovered. Routine oversights safeguard significant cash reserves through proactive accountability.

While automatic CD renewals simplify ongoing management greatly, occasional penalties arise should certain terms neglect instructing nonrenewal. Bookkeepers watch penalty disclosure dates on accounts nearing maturity alerting ahead, allowing clients to opt for either CD withdrawals gaining a few days’ extra interest, or authorizing continued reinvestment terms avoiding often-steep fees as a courtesy. Diligence defends interest earnings through compliance with deposit obligations overall.

Filing Electronic/Paper Documentation

Finally, as CD origination records, statements, and correspondence accumulate frequently across several active accounts, competent bookkeepers devise orderly electronic/physical filing systems. Easily retrievable documentation substantiates earnings activity come tax-filing season or audits while showcasing compliant asset stewardship benefiting contracting enterprises long-term according to professional standards of construction contractor bookkeeping consistently relied upon by clients.

Conclusion

Overall, conscientious CD accounting serves any contracting company well by maximizing gains from available interest-bearing assets amidst necessarily flexible capital deployments. Thoughtful record-keeping facilitates reliable controls and performance oversight leveraging low-risk CDs efficiently alongside core operations through all market cycles too according to industry-established standards.