Job Costing & Profitability

Why is it so hard to get accurate Job Costing information?
#1 challenge most Service Contractors have is they cannot track or analyze their true cost of delivering Services.

Why not?
Simple. You do not have the ‘integrated systems’ in place to do so. Typically you have what we call “multiple systems” from different software vendors.
Regardless of what software vendors tell you, if the software is developed by different companies they won’t talk to each other.
The classic software Sales Rep’s promise is: “we seamlessly integrate to abc software”. Unfortunately that is not the reality.

Here is the typical path most Service Contractors follow when it comes to software systems…….Is this your systems environment?

1. You purchase a bookkeeping system (i.e., QuickBooks, Peachtree, MAS90 or have an older out-of-date system).

2. The business starts to grow so you look to add a Dispatching program. This is when your problems begin but you’re not aware of it yet.

3. Then you add GPS, then you add Inventory, then you add ….you get the idea.

Bottom Line– if you have multiple Systems you will not get JOB COSTING information.
Best case situation – your people have to manually enter in data from various systems into excel spreadsheets. Labor intensive and error prone, so you give up.
To run a business, you need answers now, not next week or next month. It’s too late then.

WE HAVE A SOLUTION ! It’s an “ALL in ONE” fully integrated system from one vendor running on a Single enterprise database.
Now you have company wide Analytics at your fingertips. This includes extending your Enterprise to your Field Operations (Technicians)

Does this Contractor’s story sound familiar?

Job cost tracking is an extremely important part of every contractor’s business. Job costing tracks the expenses for a job, and then allows you to compare those expenses to the jobs revenue. This tells you which jobs are making money and which jobs are not.

In a recent survey, 75% of contractors indicated that job costing was among their top concerns for their business. That’s not surprising, considering that successful job costing can mean the difference between a profitable business and one that struggles to stay alive.

Take the typical Services Company(HVAC, Plumbing, Overhead Door, Medical, Elevator Services, etc.) that represents the typical contractor firm started by a former operator who saw the potential of working for himself or taking over the family business.

When you first started your business (or your family did) you knew a great deal about Services, Installations and Preventative Maintenance work, but very little about financial statements, labor laws and job costing. The business of your business was something you may have learned through trial and error.

The market was good and you did great work. Soon found yourself frantically busy. It wasn’t long before you started to outgrow your capacity to keep up. You were working hard but even then, you really hadn’t become much more profitable. The margins just weren’t growing, and cash was tight. Your company had reached a crucial make-or-break point. Either you figured out a way to make the company grow beyond the mom-and-pop shop where you were involved in every element of the business … or it would stagnate and die.

Job Costing & Why it’s so critical

Job costing involves the accumulation of the costs of materials, labor, and overhead for a specific job. This approach is an excellent tool for tracking specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs. An alternative use is to see if any excess costs incurred can be billed to a customer.

Job costing is used to accumulate costs at a small-unit level. For example, job costing is appropriate for deriving the cost of constructing a custom machine, designing a software program, constructing a building, or manufacturing a small batch of products.

Job costing involves the following accounting activities:

  • Materials. It accumulates the cost of components and then assigns these costs to a product or project once the components are used.
  • Labor. Employees charge their time to specific jobs, which are then assigned to the jobs based on the labor cost of the employees.
  • Overhead. It accumulates overhead costs in cost pools, and then allocates these costs to jobs.

Job costing results in discrete “buckets” of information about each job that the cost accountant can review to see if it really should be assigned to that job. If there are many jobs currently in progress, there is a strong chance that costs will be incorrectly assigned, but the very nature of the job costing system makes it highly auditable.

Total Service Enterprise automatically tracks the Profitability of EVERY JOB

CLICK HERE to request a live DEMO ….We will show you how to drive higher profits with true Job Costing information and much more.