Just how good is job costing in your business? Or perhaps a better question to start off with is this. Does your business even use job costing at all? For many organisations, the answer is simple: No. But there’s good reason for this approach to management accounts, particularly when there are multiple projects, lines of business or product lines at play. That’s because job costing helps you to see where and how profit (loss) is being made at a highly granular level.
In other words, if one product line is shooting the lights out, but another should be shot down, job costing gives you the information to know which is which and often at an earlier point than process accounting. If questions like ‘Where was the profit or loss made? On which jobs? In what department? By which operators? Are there production problems, and where?’ seem important to you (and for many businesses…probably all businesses…these questions are important), then job costing needs a closer look.
The good news, of course, is that MYOB Greentree offers a job costing module to help you take better control of profit and loss. Using this tool within the ERP solution means you can accurately allocate time, resources, materials, purchases and revenues to jobs and projects. And that means seeing what’s going on, where, and when.
Several of our clients have very successfully put job costing to work, in a variety of contexts. At the luxury Millbrook resort just outside Queenstown, for example, job costing is a practical necessity. The property development has multiple lines of business, from hotels to owner-occupied homes, to homes being let by the resort, and many other initiatives besides. For this company, Greentree’s job cost module provides accurate tracking of the expenses and incomes related to each line of business, right down to each property (where relevant). This has brought complete and easy visibility to a once-opaque aspect of the business.
It’s a similar story for Ryman Healthcare, which has multiple retirement homes across the country. Keeping track of the precise expenses related to each property is made far easier with Greentree’s job costing module.
At Dynes Transport, job costing allows the expenses related to individual vehicles to be totaled up, providing a ready view of the costs attached to every truck. And for United Cleaning Services, which uses multiple consumables in the execution of its work for many different clients, keeping track of what’s been used for which specific job is made easy, thanks again to Greentree’s job costing capability.
Of course, it’s not job costing in isolation which helps these companies run their operations smoothly, but rather job costing as an integral component of a broader, organisation-wide ERP system. This allows for jobs, profit and loss, and all related incomes and expenses, to roll up into a consolidated General Ledger to keep a closer eye on multiple aspects of their operations.
The common thread for companies which take a job costing approach to their accounts is the diversity of their operations. Where there are multiple projects, or multiple ‘standalone’ entities like buildings or facilities which all have their own ongoing expenses associated, job costing makes a great deal of sense. Each entity or building essentially becomes a ‘job’, with the associated expenses and incomes attached to it by number. This allows for rapid analysis to gauge the performance of each job – and it equips you to act should those numbers fall outside of acceptable parameters.
If job costing sounds like it could work for your organisation, get in touch. Greentree’s job costing module is mature and proven in multiple different types of business, and we’d be happy to show how it could improve your operations too.