Save money with a simple standard practice
A construction or trade Company that has numerous jobs can significantly benefit from implementing job costing into their financials. Job costing, sometimes called project-based accounting, tracks all revenue and costs for all jobs and projects the company takes on. So, what are the benefits of job costing?
As you can see, there are great benefits to successfully implementing a job costing process. The most important thing in order to set up a job costing system is to enter the source data accurately and code all applicable costs and revenues to the corresponding jobs. When management is actively reviewing the job costs on active jobs, they can manage the job while the job is ongoing in order to ensure maximum margin and profitability. If through a weekly review of a job costing report the business owner can improve margin on jobs from 20% to 30%, in a $1,000,000 a year revenue business, the business owner would take home an additional $100,000 in net profit. These are real numbers that are attainable if job costing is actively utilized and reviewed.
An outsourced accountant can help set up your job costing system by making sure the accounting software is enabled to track revenue and costs by job as well as make sure your Accounts Payable, Accounts Receivable, Credit Card, and other accounting processes are tailored for coding job costs. Once these processes are set up, they can run detailed reports for the business owner and walk through what the data is showing so that the business owner has the information they need to make job costing decisions. If you are in the construction or trade industries, look for an accountant with experience in job costing and tracking costs of multiple jobs/projects in order to help you walk the path of profitability™.
