Running a company is not a walk in the park. There are many aspects of your business that you need to monitor constantly to ensure that your company is well-maintained, sustainable, and profitable. One of these aspects is your business’s finances. To ensure that your business earns more than it spends, you need to always keep track of your financial transactions.
Job costing is an essential financial reporting tool that many businesses don’t seem to utilise. With an accurate job costing report, you can see which clients, projects, employees, and services are the most profitable. This gives you deep insights as to how you can further improve your business and increase its profitability. If your company isn’t already job costing, let us share three reasons you should consider doing so.
1. Job costing gives rise to accurate profitability numbers
Profitability is perhaps the most crucial consideration for all business owners. They enter into various transactions with the main aim of increasing the profit of their companies. If these entrepreneurs want to ensure better profitability, job costing is an essential tool they should adopt. Job costing utilises the costs documented to a specific contract to show how cost-effective each job is compared to the initial profit estimate.
Diligent cost allocation can provide more accurate profitability numbers by project type. This subsequently leads to more precise feedback on existing jobs and more accurate estimates on future bids. In essence, knowing how profitable each job is helps you identify where projects went right and where they went wrong. This information is crucial to help you make better financial decisions in the future.
2. Job costing delivers accurate accounting records
Aside from gaining accurate insights on the profitability of each job, recording costs to jobs is also helpful in creating better accounting records. Accounting plays a crucial role in successfully running a business because it helps you track the income and expenditures of your company. If you have good accounting practices, such as accurate and timely cost allocation, you can also prepare more precise reports and perform a more efficient analytic review of your contracts.
However, as a business owner, it can be challenging to keep track of your accounting reports while maintaining the efficient operation of your company, especially if you do not possess the relevant accounting experience. Therefore, it is advisable to outsource your accounting needs to a specialised auditing firm.
At Ackenting Group, we offer a suite of accounting services to help you stay on top of your company’s finances. Allow our seasoned accountants to provide you with timely and accurate financial reports, so you have a better understanding of your business’s performance, allowing you to make strategic decisions to expand your company. In addition, we offer an extensive range of corporate services, including hassle-free incorporation services for entrepreneurs looking to start a new business venture in Singapore.
3. Job costing provides opportunities for business development
When you know your company’s profitability and keep accurate accounting records, you can surely come up with better strategies on how to develop your business. The information that you generate from job costing can be used to expand or consolidate your company.
For example, if the job costing data tells you that a specific service is taking a significant amount of your employees’ time, you can use this as an opportunity to add more members to the service team. With more resources available, your team’s workload is reduced, allowing them to produce better quality work as they do not feel rushed to complete their current projects with the limited amount of time they have. More manpower also means more business opportunities, as your employees will have sufficient time to tackle more projects. In essence, it is all a matter of using the information that you get to your business’s advantage.
Conclusion
The primary purpose of job costing is to provide you with important information so you can conduct a thorough analysis of your company as a whole. Proper job costing is crucial in enhancing the profitability of your business and ensuring its continued growth. Running a business is indeed not an easy feat. However, using valuable financial reporting tools like job costing makes it easier to take your business to the next level.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
