[Video] 3 Ways to Take the Guesswork Out of Job Costing with Dynamics GP

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Job costing is simply the process of tracking your revenue and expenses on a per-job basis rather as a part of your overall revenues and expenses in the accounting software. But this simple process goes a long way to taking the guesswork out of determining which jobs are profitable.

  1. Tie costs back to specific jobs.

If you aren't tracking your revenues and expenses per job, how do you know if those jobs are making you money? By doing costing per job, you can pursue those opportunities that are the most profitable, but also control costs for those jobs with thinner margins. It doesn't have to be complicated. By tying it into your existing accounting software, you can make it a very smooth process and get the reporting you want on a per-job basis easily.

  1. Compare real costs to estimated costs.

You probably already do some form of estimating, because that's how most of us do quoting for our jobs. We figure out how much it's going to cost and then we build in some markup or profit into it.

So, being able to compare those real to our estimated costs, we can quote our customers better. We can also control costs for those jobs as we go instead of just hoping that it all works out profitable at the end. And this is really important for those large jobs where we have high costs and it can get out of control really quickly if we don't track what's going on.

  1. Control revenue recognition.

It's a best accounting practice to match the timing of our revenues and expenses. Just because you invoiced the job up front, or you're going to do a progress billing throughout the job, doesn't mean that is when your expenses are incurred on the job or that you've earned that revenue. So, by doing actual job costing with revenue recognition, you smooth out that net income and avoid the ups and downs that happen with your billing cycle.

Is it time to get your job costing under control? Contact us at Prophet or subscribe for more great content.

- Tracey Wright, Software Consultant - Prophet Business Group - Dynamics GP, Dynamics 365 & IT Solutions

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