One of the key components of being a small business owner is properly managing the financial aspects of your company. However, that goes beyond the dollars and cents that are coming in and out of the business. An area that often gets overlooked by business owners is properly job costing, which is a method of accounting that records the costs and revenues of a job, rather than the process.
According to a recent article from IFAI, knowing how to accurately charge for jobs is a critical part of your business’s overall success. “The importance of job costing may seem obvious—you’re in this business to turn a profit, after all—but it’s still something that many fabricators can struggle with. The burden of accounting is only part of it. To begin with, a busy business owner may run into difficulty coming up with the minutes and hours needed for successful job costing.”
The article includes an interview with Stephen Malone, founder and principal consultant at IronClad CFO, who talks about the importance of job costing and, in particular, troubles that can arise during the estimating process. “When estimating, you need a clear set of assumptions, Malone says, ‘and you need to review those assumptions with the client. There may be things the client assumes is part of the quote that aren’t. Make sure everyone is on the same page. When you’re not, and something happens, you can end up with a real customer service problem.’”
For more information about how to be successful in job costing for your business, read the full IFAI article.
And to further your financial success, read our guide on how to do a breakeven analysis for your company.