CPA’s narrow niche: Ensuring builders paid on time
BCM Services of Reno works in a narrow niche of the construction business — essentially, it makes sure that builders are paid properly — but the recovery of the construction sector these days is buoying even the narrowest niches.
“Our business is taking off right now,” says Darrin Maddox, a longtime certified public accountant in Reno who owns BCM Services.
It’s been a long wait for Maddox since he launched the firm as a sideline to his CPA practice in 2009.
“Back then, it was absolutely dead,” he says. “Now, it’s taking off like gangbusters.”
Here’s how it works: The owner of a construction project hires BCM Services to oversee payments to builders, paying somewhere from 0.5 percent to 1 percent of the project value.
Maddox and Patsy Alexander, who has worked about 35 years in construction-disbursement control, make sure that the work is completed before they release payment. If a subcontractor bills for the completion of concrete work, BCM Services inspects to make sure that the work is actually finished and pays the bills.
Often, Maddox says, disbursement-control is required by the lender on a construction project to make sure that payments to a cash-starved contractor aren’t getting ahead of the completed work.
Builders, he says, often welcome a construction-disbursement agency such as BCM Services because it allows them to save the hassle and costs of paying subcontractors on their own.
Along with paying the bills, BCM Services tracks down the W-9 forms that are required before the first payment is made and distributes IRS Form 1099 reports at the end of the year.
Owners, meanwhile, know that they’ll have a project that’s free of liens for non-payment filed by contractors or subcontractors.
“What we do is very precise bookkeeping combined with knowledge of the lien-release laws,” Maddox says.
While the recovery of commercial and industrial construction has played an important role in the growth of BCM Services, Maddox says a second important stream has been represented by high-end home construction projects whose owners and lenders turn to disbursement-control.
The state government in 2011 required firms such as BCM Services to be licensed as escrow agencies with bonding, training and operational requirements.
With that licensing, Maddox is widening the services of BCM to include escrow services for business transactions in which it holds the money until it’s sure that both sides have upheld their side of a deal.
The company also is working with attorneys who need a third-party to hold funds while litigation or settlement talks are under way.
The addition of litigation-related escrow is particularly important to the firm’s growth, Maddox says, because activity in lawsuits runs counter-cyclically to construction.
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