We all know that controlling costs is critical to maximising profitability but how many organisations can confidently theyve got this covered?
Why do costs matter?
It may seem alarmingly simple, but if you make have a guess or make assumptions on how much cost will be incurred on a job or project, then you will either make a loss or a smaller profit than you could have done. Not rocket science, but this is an area that business owners or managers sometimes overlook or ignore.
In reality, if youre running multiple projects simultaneously it can be very difficult to track the costs. Not only do you have to account for time spent, you also need to factor in expenses, overtime, supplier costs, etc.
It is often left to project managers having to remember to prompt employees for expenses or timesheets. But, there is something out there that can help!
Integrated Accounting Software!
Using integrated accounting software can help you automate what is often a tedious and time consuming process. By using project accounting software that non-financial staff can use, they they can enter details of costs themselves. Then because your system is integrated, the information is then updated in the core accounting system automatically, in real-time.
This not only saves time in re-typing data between systems, but it also avoids mistakes. Plus, by using a cloud accounting software, remote staff can still enter their expenses or timesheets wherever they are, and project managers can monitor costs whenever they want. Sounds good, doesnt it?
Integrated accounting would be really beneficial to you if your business is service focussed, because the greater the number of people or expenses (employee or third party suppliers) needed on a given project, the greater need for the most up to date information on expenditure.
Even if your business works on a fixed price basis, you can also benefit from improved visibility of costs. Areas of the project where time is running over are easy to spot, making it easier to re-evaluate and learn from errors. This means you can fine-tune prices for the next job.
So, how do you get there?
Now before you cringe at the thought, changing your accounting software isnt as arduous as you might think. Its actually pretty straightforward to gradually migrate your business from one system to another. For example, if you have an existing system you can phase it out over time. Just enter new projects into the new system until eventually all jobs are transferred over. Easy as pie!
I hope this article has convinced you to start looking at your costs more closely, and with an integrated accounting system there really is no reason to overlook your spending. Who would turn down a system that not only makes your life easier, but also gives you
Increased visibility of costs leading to increased profitability
Quicker building of quotations
Faster and more accurate billing
Better use of human resources
Ability to concentrate on pitching for business that has proven profitability
Its a no brainer!