Costing: how is each job, product and service doing?
It’s time to get serious about profits and cash
Do you know how each job, project, product, service or location is performing? Is the way you price reflected in the results shown in your accounts? Is it possible to tell, and does it matter? Our Managing Director, Graham Potts, explains:
You most likely have a ‘gut feeling’, but very few accountants will show you how your jobs, products or services are actually performing. It’s essential to understand this so you can make sure that you have the right product, service or customer ‘mix’. We often see customers price at, say, a 40% gross margin, but only achieve, say, 20%. We can help not just explain the difference, but sort out the underlying problems.
‘Job costing’ used to be an after-thought for accountants, but it’s at the front of our mind when we get your systems set-up. We’ll always look for the simplest solutions, which might be using Xero’s built-in tracking, Xero Projects, or an add-on from the Xero Marketplace.
It’s traditional to have a yearly conversation with your accountant. Often the outcome is that you:
- didn’t make as much profit as you thought
- have a bigger tax bill than expected.
That’s why at Wessex Commercial we’ve turned tradition on its head, and get serious about profits and cash. By using cloud-software, providing regular management accounts and talking regularly through the year, we can:
- make sure you know how well each part of your business is doing (your margins)
- talk through the changes you need to improve profits
- show you how you can improve cashflow.
A team that can price AND measure performance
It’s not often you’ll find someone who help you to price work and check that you’re getting the results you expect. We’re fortunate to have people within our team with that skill-set. It’s easy to take advise from a business consultant who won’t be around when the project doesn’t go as planned.
Our team draw on experience in various sectors in the UK, internationally, and very importantly, their own businesses. They’ll typically focus on high-quality management information informing effective decision-making.
We’re so confident that we can make a difference to your results by implementing effective job costing and pricing strategies that we enter profit improvement agreements with the right customers. If you’re feeling brave, and are ready to make some sensible changes, get in touch.
Ask about costing
Do you really need to borrow?
Technology, start-ups and the emergence of alternative finance such as crown funding has made it so much easier to get your hands on cash to inject into your business. However it’s not always necessary to borrow. For many businesses, there are straightforward changes you can make to improve your cashflow. Here, Graham takes you through a scenario experienced by one of our clients.
Too much focus on sales?
We regularly talk to owners whose businesses are growing, while profit margins shrink, or, worse still, overall profits stagnate or fall. Our team don’t believe in chasing turnover, although it is easy to fall into that trap. The story goes something like this: grow business, secure funding for increased working capital requirements (cash needed), come under pressure from funders, take home less yourself.
If you’re ready to have a frank conversation about how your business is doing, in particular, how each product, service or area is doing, we’re all ears.
Here’s Graham illustrating how we helped one client improve their profits.