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Going broke is easy….without accurate Job Costing

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Going broke is easy….without accurate Job Costing

It’s heartbreaking to watch. Construction companies go out of business because of two harrowing words…poor costing. It happens all too often.

For example:

We knew of a company who was using a simple accounting system with no job costing and management. They were relying on spreadsheet reports from their Project Managers to collect and aggregate data. All of the payable invoices we being paid as they came in but they were not being referenced to Purchase Orders or Subcontracts that had been placed on each Job and Cost Code or the Budgets.

It almost got to the point of being too late. Where the cash coming out of the accounts was going to deplete quicker than the cash coming in.

All this could have been avoided. Quickly, simply and most importantly with a goal of increasing profitability.

Job costing is so often not given the time it deserves. Quite literally EVERYTHING in the job is based around the decisions you make during job costing time.

If you are a medium sized Construction or Building company and you are not using job costing software, you should ask yourself the following questions:

  • Is the information you receive on jobs timely?
  • Do you have a system where costs are re-entered into Spreadsheets against Jobs, taking valuable time and is subject to errors?
  • Wouldn’t it be good to enter information once and have all the Job information updated?
  • Are you getting “One version of the Truth” or several versions of scattered data?
  • How quickly are you able to tell if a Job is in trouble?

I can almost hear you saying: ‘Job Costing systems can be expensive’, ‘How do I know what the return on investment will be?’, ‘What other benefits will a system like this provide?’

Here’s another client we have been working with:

A client once told me that for each Cost Plus Job , it used to take him 2 to 3 days to put a claim together at the end of each month. Now all he does is run the report with all of the paperwork already attached and check or edit the invoice which takes him half an hour.

That’s half an hour as opposed to 3 days!

So, the software basically paid for itself after using it the first time!

Lastly, I wanted to share 5 points with you that will demonstrate just how versatile job costing software can be for your business.

  1. You need to see the detail. Job Costing software can show you  all transactions  down to Cost Code Level against Budget
  2. Track your Variations, Pending and Approved
  3. Track your Orders and Commitments so that you can see what is ahead
  4. Track your Labour Hours against your Budget
  5. Produce your Progress Claims directly out of your Job Costing Software.

Speak to Thrive today to see how you can implement a system that will ultimately make you more profitable, efficient and scalable.

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