What types of companies can benefit from job costing?
The types of companies that implement job costing are manufacturing, construction and service industries that need to track sales and cost (labor, material and other) to a specific job for a specific customer. The customer may have more than one job related to them. QuickBooks allows you to add a job under the customer name which starts the process. The importance of job costing is to evaluate your job estimates to the actual results at the close of the job or even at the end of the month. This monitoring of data provides good feedback to improve your estimating skills in the future. In the end, your financial statements will reap the benefits of job costing done timely, efficiently and correctly. Don’t get me wrong it can be a tedious process but if you set up properly the review process of each job will be efficient.
What problems do small business owners experience?
One of the problems is not having good accounting and reporting for each job. I have worked with many clients who had no idea how their jobs were performing. With SimpliProfit's help in a couple of months the gross margins can improve drastically. There are a series of task and controls that need to be in place to really get your arms around how well the company is performing on a whole and in detail for each job. The analysis should be done each month by utilizing job profitability reports in QuickBooks. The takeaway here is how you record your transactions is critical to whether these reports can be utilized for the review process at the end of the month or when the job is closed.
Another big problem we see is the labor cost is one of the hardest tasks to get under control. Employees record their time to wrong jobs, staying clocked into jobs all day when they have been working on three different jobs. Time recording is very difficult to get 100% correct. Setting goals to improve and review frequently will get you close enough.
One of the tools that will help improve the recording of labor time is integrating the TSheets App. TSheets App is an Intuit company that tracks time by each job which then integrates to your QuickBooks. The benefits are tremendous for monitoring and reporting with ease in real time. I highly recommend this product for anyone who doing job costing and tracking labor to jobs.
6 Steps to get you reporting job profitability.
Set up jobs under your customers
Set up your items
Assign customer:jobs to your expenses, if applicable
Enter your estimates
Create invoices for jobs
Run Job costing reports
To obtain the job costing setup guide for these 6 steps above please click here.
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