Are you looking for a better way to predict and manage the expenses involved with providing your products or services? Whether you own a manufacturing business, a professional services company, or a construction business, job costing could be the answer you’re looking for.
Job costing means maintaining a record of the expenses involved in each job or project as you go along, totaling these costs up at the end of the project, and measuring them compared to the income you collect from the project. If your business handles projects that take months to complete, involves independent contractors, or requires lots of materials and inventory, job costing can help you keep track of all the details so nothing falls through the cracks.
The benefits of job costing are many:
- It reminds you to invoice for all elements of the project, ensuring you get paid appropriately.
- The information you collect will help you develop more accurate proposals and bids for similar future projects.
- Reviewing costs for similar projects before starting a new one helps you estimate the working capital needed and obtain the necessary financing in advance.
Reviewing your job costing records over time helps you see what kinds of projects and which customers are the most profitable—and assess whether your work is appropriately priced. Ultimately, it can lead to increased profitability.
To get started, search online for job costing software specific to your particular industry, or ask colleagues for suggestions and recommendations. Ask yourself these questions when choosing software:
- Is it easy to learn and use? If the job costing system is too complex, you and your employees won’t use it.
- Does it integrate with your current financial, bookkeeping and/or time tracking software? Unless these tools can work together, the usefulness of the software will be limited.
- What are the system’s capabilities? Will it collect the specific information you need? Assess the types of data the system gathers and what reports it generates so you know whether you can slice and dice the data in a useful way.
- Can the system grow with your business? You don’t want enterprise-level software that’s too complex for your needs. However, it needs to be scalable, enabling you to add new products or services to your offerings as you grow.
- Can it be used from anywhere? You’ll want a tool that works in the cloud and/or has a robust mobile app so you and your team can use it on the fly or when working from home.
Once you try job costing, you’ll be amazed you ever got along without this valuable financial management tool.
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