Measure and manage project profitability
Measuring and managing costs is essential to running a profitable and sustainable business. IT can help you track and manage costs and profitability very effectively.
Many small businesses use finance software packages such as Sage, QuickBooks and Xero. These are relatively easy-to-use finance systems. When setup correctly they allow business owners to generate monthly management reports, calculate VAT, monitor project profitability, and produce year end accounts quickly and accurately. A well configured finance system coupled with ‘tactical spread sheets’ for monthly sales forecast and monthly expenditure forecast will allow you to manage your business more effectively. You will have the ability to looking forwards financially, run in-month reports, and look at behind time reports too – most account reports are in the past.
Involve your Accountant
Ask your accountant to help you configure your finance system and project profitability and tracking tools. This will help you manage specific costs of sales and overheads more accurately. Your accountant will charge you for their time, and a few hours will be really beneficial, especially if you are experience growth. Use a distinct nominal code for each type of sale made. Post costs to the corresponding nominal code to see exactly where money is being spent. Use a spreadsheet to produce graphs and pie-charts of your data. The more accurate the interpretation of your data, the more accurate you can forecast.
Sage has a really simple but effective project reporting system. Code all purchase invoices to a nominal code and to a customer account too. Add in staff costs to give an accurate report showing the project budget agreed, costs incurred so far, and the sales invoices paid to date. With one calculation you can easily work out the project P&L, and make meaningful decisions about the project’s resources.
Invest and keep profitable
Invest in your finance and IT systems and involve your accountant, and you will have some powerful IT driven finance tools to track project profitability and keep your business profitable.
Sage Accounts – Project report view