What's your job profitability? I meet with business owners every day that are unsure of their profitability at a company or job level. They "think" they are making money because they have a few dollars in their checking account. Having money in your checking account doesn't mean you are profitable. It might mean you haven't paid all the bills yet, so you have a little cash. Cash and profit are two different concepts. If you aren't profitable, you won't have longevity in your business.
It doesn't matter the size of your business or the industry. Profitability is something you should be monitoring on a regular monthly basis. No business is too small or too large to do job costing. Such an excuse is your way of not holding yourself accountable to managing your business wisely. Failing to plan is a plan for failure.
So what do I mean by job costing? You should know how much you make and spend on each job. Expenditures should be tracked for those direct labor and material costs to each job. In addition, you should also be tracking overhead costs and allocating them to your various jobs as applicable. There is always going to be some overhead that is considered general overhead. Though often times too many dollars are thrown into general overhead, when they could easily be tracked to specific jobs. If you don't know your exact income and expenses for each job and your overall business, then how can you know you are making a profit?
QuickBooks? has easy-to-use features that allow you to do job costing for time and materials. So don't worry about having to track it all manually. Rely on tools to help you run your business more efficiently and effectively.
Are you curious how you are doing with job costing measurements? Here are some quick and easy questions to gauge your job costing performance:
1. Do I track each customer's revenue information through a detailed invoice?
2. Do I have a way of breaking down my direct job materials cost by customer?
3. Do I associate all time spent to each job accurately with actual dollar amounts?
4. Do I have access to reports to monitor profitability on each job in a timely manner?
5. Do I have a way to trend the fluctuations in job profitability from job to job, month to month, etc?
If you answered "NO" to any of these, then it's time for you to take an objective look at your financial goals. It's time for you to implement a job costing mechanism to help you answer "YES" to these questions. How can you track your profitability and long-term growth plans if you don't have detail at a job level?
Here are some quick and easy ways to utilize QuickBooks? effectively to help you with your job costing process:
1. Set up the QuickBooks? Item list so that you'll have both an expense and an income aspect to each of the items. This will allow you to track your costs and your income; therefore, providing you profit by item.
2. Record your sales through the invoicing or sales receipt process. This will record the income aspects of the items.
3. As you purchase the product or service items, make sure that you utilize the Items tab so that it will record to the cost to the appropriate item. In addition, make sure to assign your customer/job information to each line item so that you'll have the costs associated to the appropriate customer/job for job costing.
4. Utilize the time tracking mechanism in QuickBooks? so that you and your employees can track their time by item and customer/job. No dollar value is associated with this time until you actually pay the employees within QuickBooks?.
5. QuickBooks? has preformatted reports that you can access to have job costing information right at your fingertips. These are found under the Reporting menu and the Jobs/Time/Mileage option.
6. QuickBooks? has the ability to provide reports for any time period you select. This will allow you to have a variety of detail over the growth of your business and to produce trending reports. You can modify the report as needed to meet your needs.
One additional important aspect is that you have a good accounting professional on your team of resources. They will be able to help you understand what these reports are telling you in terms that you can use. Reports alone don't provide value if you don't understand them. So it is key that you understand the reporting information and how you can utilize that information to assist you in decision-making as you grow your business profitably.
It's all about how you set-up your accounting/bookkeeping software package and how you use it! What justification can you give for not knowing job costs within your business? None! Challenge yourself today to become more adept at running a financially savvy business through job costing.
Contact: Pam is the author of Out of the Red, a Certified Management Accountant, and a Certified QuickBooks? ProAdvisor. QuickBooks? is a registered trademark of Intuit. 816.304.4398. http://www.rppc.net
Mercedes Benz s500 rentals Salem ..As small business managers, we juggle limited resources in a... Read More
Many ventures are faced with the challenging task of raising... Read More
There are both fixed and mobile detailers. Consumers often will... Read More
One of the most common issues that comes up for... Read More
Most small business owners seek advisors who can help them... Read More
Opportunities for home show businesses have never been more abundant.... Read More
How often has someone thought of starting a business based... Read More
Unfortunately for all buyers, each selling organization and their individual... Read More
How careful are you with the data you collect from... Read More
Congratulations, you are starting a small business! You are taking... Read More
Hi, Charles...here, Your Cap and t-shirt guy From Texas. How... Read More
Q. I am a former pastor who left the ministry... Read More
Essentially there are 5 tremendously powerful methods to make money... Read More
A Private Investigator is a professional trained in the art... Read More
Consistency is a huge word when operating your business. I... Read More
Multimedia is everywhere on the Internet, whether in the form... Read More
What could Seinfeld possibly have to do with marketing a... Read More
Bookkeeping?the "dreaded" word is something we all have to worry... Read More
If you're organized, smart, capable and willing to work with... Read More
Many pressure washing companies will be glad to take on... Read More
You're a small business owner with a hot new product... Read More
You are probably hard at work promoting your business (and... Read More
So you think you're not justified in taking time away... Read More
Here are just a few ways to increase and diversify... Read More
Large corporations use employee manuals to both educate employees about... Read More
Dowagiac cheap limo service ..American small business is again in transition. Many employees, now... Read More
Articles abound advising the business community how to properly screen... Read More
It seems so long ago that I started my first... Read More
CONSIDERATIONS FOR YOUR INTERN: Specify the number of hours the... Read More
The revenue history is a vital piece of your power... Read More
Small Business, Big Business ? What's the Diff?Well a lot... Read More
As you may know, there are many ways to incorporate... Read More
Seventy percent of US households use the web when shopping... Read More
The FTC Franchise Rule maybe changed, as the Federal trade... Read More
Q: I have outgrown my home office and need to... Read More
I propose this thought on the subject of Franchisee territory... Read More
In the world today, many people are further in debt... Read More
Franchising has made the world look really small. The well... Read More
If you are thinking of turning your current into a... Read More
The book, "Become the Squeaky Wheel," by New Hampshire author... Read More
Scenario OneDuring a recent presentation, a business owner was given... Read More
I meet and talk to hundreds and hundreds of business... Read More
Let's face it, we all tend to get stuck in... Read More
I love lists. I make them for everything. And I'm... Read More
When pressure washing heavy equipment each piece of equipment has... Read More
Early in my career, I wrote an article for a... Read More
At first blush this idea might be difficult to wrap... Read More
Are you -- like 70 percent of small business owners... Read More
Boston itself covers 50 square miles of concrete and traffic,... Read More
Everything starts with a business plan: If you don't have... Read More
Small Business |