By Colin Atkinson from CA Management Services and Danni Smart from Triumph Business Systems
Knowledge of the bottom line is perhaps the most important piece of information any business needs in order to function efficiently and be successful. An accurate picture of what a particular project is costing ensures improved profitability. Furthermore, the ability to view and analyse all operational costs helps to improve productivity and procurement. Job costing is something that can facilitate this; it gives you more control over your business costs and margins, and generally helps you make your business better.
What is Job Costing?
Job Costing means different things to different businesses. It could be applied to servicing a car, charging your time, or research and development. In general terms, Job Costing is the allocation of all time, materials and expenses to an individual project, job, item or event. It allows organisations to collect and report revenue and expenditure associated with these jobs against budgets and forecasts for better business management.
The structure and operation of Job Costing will vary greatly depending on the nature and size of jobs in a particular industry. For example smaller jobs put more emphasis on scheduling, resource allocation and invoicing, while larger jobs that may go for months and be worth millions of dollars put more emphasis on procurement, cost breakdowns, budgets, work-in-progress and reporting.
The key to job costing is capturing the right information and then being able to report on it. Every business is unique; they each have different ways of managing jobs, different sets of KPIs, and require different pieces of information to report on.
What are the benefits of Job Costing?
1. Better Control
While businesses may be making money, sometimes problems can be hidden in the background. Getting better control of jobs is good for businesses during both upturns and downturns of the economy.
2. Better Platform for Growth
A good job costing system is the foundation on which businesses can succeed and grow. Not only can it provide a competitive edge, it provides a structured framework to expand from.
3. Improved Profitability
By capturing and dissecting all the real costs associated with a job or project, businesses are able to easily analyse what works and what doesn’t, allowing them to continually improve their bottom line.
4. Systemised Approach
A good job costing system should have all the procedures and systems in place to operate a business on a day to day basis. It allows a business to work more like a synchronised machine. Not only does this add value to a company, ultimately it means that the business owner or manager does not need to be as hands on. They can work more on the business instead of in the business.
What to look for in Good Job Costing Software?
Job Costing has a very broad spread of functionality that interacts with many aspects of a business. The table below shows some of the typical business functions you might find in a job environment and the associated software features required to cover these.
Once you determine the functionality you require to drive your job environment, look for software that can provide this functionality in a fully integrated way. Also ensure that the software is still easy to use and understand. The last thing you want is overly complicated software that is a burden to use and operate. And finally, make sure it delivers the control and reporting that will make a difference to your business, helping it succeed and grow.
