January 8, 2018 Jeremiah

Why Cost Accounting Could be the Secret to Your Success

Imagine knowing at any time, exactly how much profit you’ve earned from a job or project. Would that make a difference in how you created your proposals? If you had insight into your profitability for each job, could you be more competitive with your estimates?

Job costing, also called cost accounting, is the practice of tracking business profit within your accounting system. The more insight you have into where you make (or lose) money, the better you are able to make smarter decisions, and the stronger your business will be.

Cost accounting is a practice most construction and manufacturing companies utilize in order to manage their overhead — but don’t think it’s only for those industries. Every company that has customers requiring work and/or projects should have their accounting system primed to facilitate profits on those jobs.

When using QuickBooks Online (QBO), the first and most essential step in cost accounting is to create a chart of accounts. Having your accounts set up appropriately anticipates a lot of the ‘what if” scenarios, and the ability to capture the info available to you is extremely important. Establishing your chart of accounts upfront and correctly, saves a lot of time and resources as opposed to recoding a mature system. But don’t worry if that horse has already left the barn, we can help with that!

QBO has “rules” that you can follow to create your coding information for your chart of accounts. Once you have established your chart of accounts using our guidelines, you’ll have the perspective to view income, net revenue, gross profit by client or customer or project summary at any time.

Establishing and maintaining that chart of accounts however, can be daunting especially with growing companies. vbo Solutions assists our clients with setting up, recoding or even cleaning up their chart of accounts so they too can have better business intelligence. We also assist with running reports and maintaining the system, ensuring everyone is utilizing it correctly and consistently, and training all those who will be using it. Employees are human though: if someone begins coding in error, it will create misinformation and that can lead to problems so vbo routinely checks to make sure the information input into the system is correct and you can be sure you made money on that job.

, ,