Do you remember that constant awful feeling you get in the pit of your stomach? Not the one connected with your in-laws, the business one.
Aha!
This article serves to help you keep the money in your wallet and create more even during a crisis. Before we get into the good stuff, you’ll need to know what Financial Management Processes (FMP) is.
This is basically ways to identify costs and expenses on a project, get approvals then get payments done.
And this is important to know because that’s the ‘HOW’ of the article.
We know you have no clue where to start.
Or else you wouldn’t still be reading this.
The large subtitle below points you to a great place to start in making sure no errors are made in your FMP’s that affect how you cost jobs.
Logical money game plans are the backbone of a healthy business. The results you get from these should influence how you budget, the decisions you make and any change in the direction of your trade business.
There’s nothing more wasteful than having the correct person working in the wrong space.
Don’t bog down your team with tasks such as administration when they could be kicking ass at what they do best – bettering your trade business.
Have you come across the saying, “Too many cooks spoil the broth?”
In terms of your business, you’re better off being served by a single source of information.
This will create plans, budgets, and assist you in making decisions that are both logical and correct.
The Midas Touch is possible in your trade business.
A carefully controlled financial processes grant you an eagle’s eye view of your trade business.
This means you can steer your trade business in a direction based on real numbers, not guess work.
To outsiders, you’ll look like you have a gold touch!
Buying the correct management system for your trade business will increase your confidence.
By having a single source to store all your business data, there is a lesser risk of doing things twice or simply having wrong information. This is super common when you have “too many cooks” taking on this task.
Multiple systems shoot up the risk of error. But how can you truly be sure that you’re using the correct numbers?
The next large subtitle gets into that quickly. We’re finishing up now.
Single Source of Truth
Connect all your financial processes in one software system.
This should record everything from the moment a customer inquires about your services till they put the cash in your pocket.
We also understand that there’s too many software options to pick from. We quite like MYOB, or Buildertrend if you’re in the building business. Quickbooks works best for any type of trade business, thankfully.
If you’re not sure what MYOB is, we’ve already reviewed one of their latest systems here so that you know what to expect before buying it.
They are also a strategic partner of ours. *wink wink*
Use Cost codes
Managing your cash is super easy when your expenses are organised.
The best way to do this is by using cost codes.
Don’t get lost just yet.
These will help you to divide your costs into specified categories for a clearer understanding of how much it’ll cost to do certain work.
This will be in comparison to drafts of how much you thought it would cost. Does that make sense?
If you’re using software such as Buildertrend, you can use the Estimates tool to prioritize these cost codes.
As the project moves along, you’ll be able to track your business expenses and categorize them.
The fantastic feature here is that it promotes transparency with finances for different users. If you decide to use other financial tools plus cost codes, you’ll see where you’re bleeding out too much cash (per job) and how to fix it.
You’ll gain wholesome customer experience points as you gain control over this.
Time for that mix and mingle
Now that you’ve connected everything, there’s just one more step left.
Yep, your team.
Encourage collaboration by picking out a software solution that tracks, administrates and streamlines communication.
If this is done within the same environment where all your other trade business data is in then you’re headed for success. Say goodbye to seeing double on those entries by making use of systems like Buildertrend or QuickBooks.
When you’re picking a management software, it’s best to do so with your accountant.
They will help you weigh up the costs and benefits plus setting up the system.
At Tradies Accountant we regularly sit down with clients and discuss add-on software that could be beneficial for businesses like yours.
Contact us if this sounds like what you need.