Her business may have grown revenues by 294 percent, but Mindy Nunez Airhart also noticed it was having cash flow issues. Working with Bloomberg and Goldman Sachs employees, Airhart and her partner were able to figure out what happened. It turns out Southern Services & Equipment, Airhart’s steel fabrication company, was charging less than the market rate certain labor costs.
“It was a total game-changer for us because if I don’t bid enough at the beginning of the job there’s no way for me to make more money on it,” she said in an interview with QuickBooks®.
If you’ve ever come to the end of a promising job and walked away with little to show for it, there’s a good chance that inadequate cost estimating was the culprit. Conversely, the opposite might happen too — you might have been outbid for projects because your estimates had too much padding in them.
With QuickBooks Enterprise, you can use proposal templates—culled from reports favored by your contracting industry peers—to create competitive bids and win new projects. After the project is green-lit, you can easily enter costs as they’re incurred, letting you know exactly where you stand before it’s too late to adjust.
With this in mind, let’s take a closer look at how powerful job costing tools can help you run a tighter ship and win more bids.
Preserving your profits
Monitoring the level at which revenue exceeds costs is crucial for contractors. With so many variables across multiple projects, that endeavor hasn’t always been easy.
But today, you can sharpen your focus on labor, materials, and overhead costs by customer with QuickBooks Enterprise. You can also view income and expenses by individual job or project. This allows you to spot cost overruns quickly and adjust on the fly, preserving your margins before they dry up.
Absolute Drywall, a Houston-based contractor, had experienced explosive growth between 2013 and 2014, and Enterprise’s job costing function played a pivotal role in optimizing profits. The company went from managing four jobs per month in 2012 to more than 300 in subsequent years, and Chief Operating Officer Jennifer Speck credited two features, Memorized Transactions and the Reminders Dashboard, for efficiently managing the boom.
With so many projects underway at one time, the Memorized Transactions feature, which can be used to automatically enter transactions, helped Absolute Drywall anticipate overhead expenses. The Reminders Dashboard, which acts as to-do list for recurring tasks, prevented bills and invoices from slipping through the cracks during busy growth periods. Tracking pricing on each job became more manageable when material or labor costs weren’t inadvertently overlooked.
Digging into cost details
Sometimes tracking costs by job or project isn’t enough—you need more granular data for your analysis. QuickBooks Enterprise gives you the ability to place items into more than 10 different categories in the job costing function, enabling you to sort by inventory parts, service items, or sales tax items, among others.
You can also use a bill, check, or credit card charge to record each purchase, and the corresponding item rolls up to the customer and project level. With QuickBooks Enterprise, there aren’t any complicated formulas to concoct or calculations to make—all your job costs populate reports automatically.
Speck’s organization has been able to use QuickBooks Enterprise’s job costing feature to create a system of its own when analyzing multiple jobs in progress. Since every business is unique, you can track profitability more efficiently by having a birds-eye view of projects in play.
In Absolute Drywall’s case, its radius of operations expanded beyond 70 miles when the greater Houston area’s residential development took off in 2013 and 2014. Along with the contractor’s expansion came a need to effectively control it.
With a larger service area, Absolute chose to customize its QuickBooks’s job costing dashboard and view projects by three segments: builder, community and the physical job address itself. In this way, they could view status and profitability in ways that made the most sense for the business.
Time is money
Tracking time accurately is essential to assess job costs and record billable and non-billable hours properly. For this, QuickBooks Enterprise integrates seamlessly with time-tracking software TSheets by Intuit®.
You can automatically assign such hours to a customer or job through a single-activity entry or a weekly timesheet, syncing them with your QuickBooks Enterprise in one click. Employees also have the ability to clock in from anywhere at any time.
Payroll at your fingertips
Labor costs commonly account for the largest cost of construction projects, so it’s critical to accurately forecast the amount of labor required to finish a project in the black. One distinct strength of QuickBooks Enterprise is the ability to sign up for Assisted Payroll, which streamlines payroll processes and guarantees accurate tax filings. With a few clicks, you can estimate payroll costs for projects without having to mess with an external solution that requires additional time and resources.
Fine-tune your labor costs
When you input labor expenses into the job costing function, individual rates can be customized to reflect the spectrum of hourly rates you pay for different classes of employees. Not only will you be able to enter your own cost of labor but you can also add rates that you charge the customer, affixing different profit margins to different projects. From there, you can view labor costs by employee, job, or customer. For an even clearer picture of profitability, you can formulate rates to include direct costs such as benefits and payroll taxes—and indirect costs like travel and bonuses.
Stay on the job
For builders and other contractors, keeping tabs on job profitability yields some unique and highly useful reports. At any point in time, you can view all jobs in progress from one main screen. The committed cost by job report exhibits where you’re at per job regarding the projected budget. Other helpful mid-stream snapshots include the time and cost it will take to finish the project as well as the percentage completed.
How it all adds up for your business
QuickBooks Enterprise helps you say goodbye to tedious manual processes for job costing. By housing all your operating income and cost data under one roof, you’ll no longer need to tap multiple software platforms and manipulate tricky spreadsheets. It won’t take a great deal of time and effort from you or your staff, either. All that’s needed is a regular entry of cost and revenue data, and Enterprise does the rest.
As you leverage the robust functionality and reporting capabilities of QuickBooks Enterprise, you’ll be able to identify profitability issues by customer, job, or item. The ability to create accurate quotes and spot job cost issues will give you the confidence to build a better business while protecting your bottom line.