Job Costing - Do You Know How?

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

---

Get Out Of The Rut And Back On the Track

Do you sometimes find yourself just going "through the motions"... Read More

How to Create an Information Plan

What is in an information plan?Before you even meet with... Read More

Success & The Nature of Things

The story is told of a tiger chasing some goats... Read More

Where to Find a Cash Windfall of $10,000 to $1,000,000 -- You Never Knew You Had

There is a rather famous true story called "Acres of... Read More

Presentations and Sales Automotive Detailers

Many auto detailers fall short in their sales presentations. I... Read More

How to Get Maximum Results With Minimum Effort

Get maximum results with minimum effort. Sounds great doesn't it?... Read More

Grab Your Consumers Attention in a Cluttered World of Marketing Communications

A cluttered world of marketing communications diminishes the ordinary. The... Read More

Everything I Need to Know About Business I Learned From My Nametag

So there I was ? sitting in the audience of... Read More

Aircraft Washing Service Operations Manual

Anyone who is serious about washing aircraft as a full... Read More

Finding the PERFECT Alliance Partner

Where do you look for the appropriate alliance?One of the... Read More

How To Build Business Credit

Having their own business is something many millions of people... Read More

Challenging the Gospel of Growth -- Must Business Grow to Survive?

A cherished business doctrine is that growth must be a... Read More

Debit and ATM Card Advice for Small Businesses

Your business account comes with an ATM, Debit card. Pick... Read More

Are You Running Your Business or Is Your Business Running You?

Being a small or home-based business owner can be loads... Read More

Truck Wash Business Case Study

Often smart entrepreneurs look for out of the way businesses,... Read More

Secrets of Cleaning Truck Trailers in Your Fleet from a Veteran Truck Washer

Cleaning the trailers towed by big trucks is not easy,... Read More

Keeping your Business Alive

As long as you eat and breathe you will stay... Read More

Virtual Assistant ? Questions Answered

What is a Virtual Assistant?A Virtual Assistant is a person... Read More

Consistency Builds Trust

You know your prospects need what you sell. You know... Read More

Mobile Car Wash and Cleaning Post Office Jeeps

If you own a mobile truck washing, pressure washing or... Read More

Small Business Ideas - Your Image Can Lose You Business

What image do you and your people portray to your... Read More

Can Your Business Run Without You?

What would happen if you decided to take an extended... Read More

Self Serve Car Washes in the United States

In the 2003 Auto Laundry News Survey it was determined... Read More

FTC Report on Franchise Rule Making; What Purpose?

The Federal Trade Commission out of the blue decide in... Read More

Pressure Washing Business Case Study, Tractor Cleaning

So often small service businesses fail to exploit niches, which... Read More

SBIR - A Nice Add-on Business

If you are a small business and qualify to participate... Read More

10 Best Practices to Consider as Your SBIR Negotations Approach Contract Signature

10 Best Practices to consider as your SBIR negotiations approach... Read More

Dont Wait - Sell The Future Now!

Just as you are about to say "good-bye" to your... Read More

How to Find a Microenterprise Loan for Your Business

If you're looking for start-up capital for your business, but... Read More

How to Become Successful in the Field of Financial Consultants

Financial Consultants are one of the fastest growing industries today.... Read More

Franchise Rule to be Revised; Why?

The FTC, Federal Trade Commission, is considering modifying the franchise... Read More

Business Debt Collection Letter Writing Secrets

Debt collection letters--an overview"Debt collection letter" in the singular may... Read More

Combating Over Regulation of Small Business

Many small businesses do quite well due to the blood,... Read More