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Level 1

Job costing and making sure monthly reports are correct

We have a construction oriented business that has anywhere from 50-100 "jobs" per month.

Each job has about 10 expenses and an invoice to the customer


The issue becomes when we want to report both expenses and income for said jobs and keep them in the month.  

Let me give you an example:

Job A has materials come in June 20th.  We enter those bills in June.  Then more come in July 10th, we enter them in July.

We ship the job July 20th.  This is when we execute an invoice to the customer, on shipment.

We complete the job July 25th, but a few straggling invoices come in Aug 10th.  So those bills are entered in Aug


As you can see I have a job that is spread out over 3 months, when the actual "work" on the job took maybe 3 days.


When we run a PnL it is not correct because of the dating of the bills vs the dating of the invoice.


Our jobs do not run long enough to do a WIP and all the accounting involved in that, this is purely a dating issue.   The only work around we have is to go into said job and RE DATE all the bills and invoices to match up to the corresponding month of shipment, which if not careful throws off our dating on AP.


We pay commissions on our jobs so we have to have accurate job costing and profits per job on a timely basis.  Plus we want our monthly PnL to be correct on the income we earned.


Does anybody have a solution that we are not thinking of?  We have almost gone to an envelopes type of accounting where the bills/invoices wait in a holding box until we ship the job then enter all the data at that time.  The problem with that is jobs can sit in the warehouse for 2 weeks or 6 and that can cause an issue with AP.


Any input would be great.  Thank you



1 Comment
Level 15

Job costing and making sure monthly reports are correct

Don't rely on the P&L. Run Income (net) by Customer, or Profit reporting. The P&L is the simplistic financial perspective. You are supposed to be using Product and Service items, marked as "two sided" so tht they link to COGS or Expense, and to Revenue, for you. That way, you also have Cost, Price and Quantity, none of that is P&L. The goal is to have, for example: Flooring vs windows vs cabinetry (noninventory items) and Electrician vs landscaper s Plumber vs Engineer vs Architectural fees (service items) to see that info in reports, use that on estimates and purchase orders, and all of the Noninventory items link to one Expense account (COGS) and to one income account (sales). The Services items all link to one expense account and the same income account, for instance. The point is to avoid micro-managing by more Accounts, when what you want is the Details from Activities = products/services. Then you run Product/Service, customer and profit type of reporting.

The best reference for the Chart of Accounts is the tax form this entity files. The P&L is meant to provide that perspective. It is not the Operational and Activity perspective, but the Entity's Financial perspective.

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