Accounting Isn’t Just For Taxes: It’s The Way To Understand Whether You’re Building A Profit Or Just Walls!

Most people see accounting as a technical chore.

Something for the tax man, the CPA, or maybe the bank.

But after more than a decade of working behind the scenes in real estate finance, I can tell you this:

Good accounting isn’t just about reporting. It’s about control. It’s about leadership. It’s your power tool.

Smart Accounting = Smart Decisions

Forget asking “how much have we spent so far?”

The real questions a savvy developer should be asking are:

Are we over budget in any area?

Do current payments match actual on-site progress?

Do we need to inject more capital soon?

And how does all this compare to what we promised investors?

When you treat accounting as a management tool, not just a reporting requirement—you shift from reacting to leading.

Two Financial Tools Every Developer Needs

Let’s talk about two simple but critical tools that form the backbone of financial control in any real estate project:

1. The Pro Forma – Your Financial Roadmap

The pro forma isn’t just a budget—it’s the full financial DNA of your project.

It tells you:

What every component will cost—foundation, mechanical, permits, marketing, interest, etc.

How much equity is needed

What kind of financing you’ll raise

When money goes out and when revenue is expected

And what your true profit might look like at the end

In the projects I manage, the pro forma isn’t built once and forgotten.

It’s updated constantly to reflect real costs, schedule changes, and actual payments.

Let me be blunt:

If you’re not updating your pro forma—you’re flying blind.

Or worse—you’re giving your investors a gut feeling instead of real data.

2. The Draw Schedule – Your Cashflow Compass

This document tracks what’s actually been paid out, by construction phase or work category.

It shows:

What was completed

What’s been submitted for payment

What was approved

And where you are against the original budget

It’s your early warning system—helping you catch surprises before they turn into crises.

And trust me—on any project that doesn’t track draws properly, I’ve almost always found:

Duplicate payments

Misallocated costs

Or charges that were never meant to happen in the first place

Bottom Line:

A developer who manages their books properly isn’t just checking boxes for compliance.

They’re staying in control.

They’re protecting their margins.

They’re building investor confidence.

And most importantly—they’re freeing up time to chase the next big opportunity.

Coming Up Next…

In my next post, we’ll go beyond the spreadsheets:

Into contracts, completion percentages, subcontractors, insurance policies, and waivers—

All the stuff that, if you ignore it… could cost you big.

Got questions? Drop them in the comments!

Even if you don’t know what a “draw schedule” or “pro forma” is—

That’s what I’m here for

— Lihi