Job costing is the best way for you to increase your profit and cash flow. This means you need to track the profit of individual jobs. For example, any single job may involve differing costs of labour and materials. You need to work these out and allocate the materials and labour to each job. Once you have completed this task you need to make sure you can easily see the breakdown of invoices and expenses on the job. That way you can work out your gross profit margin.
There are a lot of programs on the market that can do this task for you effectively. This means you can input the quotes and then set budgets on jobs. After this you can track all of the expenses to the job. This will enable you to realise how much profit you are making from each job and if there are any jobs that are causing you to lose money. These programs are very useful; however, like any system they require investment. Without the correct investment for set up – you may have a cheap system that does not work.
Another option is to get your accountant to help you work out your cost of goods sold and see if your current accounting system can do the above task. A lot of the time the actual tracking is in the way you use your systems and processes. You can buy the best system on the market but if you are not using it effectively you are wasting your money. There are ways you can track through xero and quickbooks. This may not work for every client but it is definitely an option.
If you would like our help, just let us know. We are more than happy to give you a helping hand and even better, we are well versed in the costing process of the industry.