Custody and Payroll in Contracting Companies: A Practical Guide

Custody and payroll are among the biggest sources of financial leakage in contracting companies if not tracked correctly. Custody is an amount given to an employee for project expenses, and payroll is a fixed monthly obligation — both must be linked to projects and expenses.

What is custody and why does it need tracking?

Custody is an amount an employee receives to spend on project needs (materials, daily wages, incidentals). If not tracked, it turns into a financial hole: amounts spent without documents, and pending balances. The fix: every custody has a statement of what was spent and what remains.

How do you manage custody properly?

• Record each custody under the employee name and the project.
• Link every custody expense to a document and an item.
• Track the remaining balance and request settlement periodically.

More details in payroll and custody.

Payroll in contracting companies

Payroll is a monthly obligation that affects cash flow. Link the team cost to the projects they work on so you know the real cost of each project, not just the company total figure.

Common mistakes

• Disbursing custody without documents or settlement.
• Not linking payroll to projects, so it gets lost in general cost.
• Relying on memory instead of a documented system.

Conclusion

Controlling custody and payroll protects your liquidity and clarifies the real cost of your projects. A system that links them to projects and expenses prevents leakage. Read what is contracting accounting software, and discover Bonyan contracting accounting software.