Job Management
It is important to know the difference between Job Costing Software and Business Managment Software. It is even more important to make sure these are the same piece of software.
Job Costing Software is summed up by the simplest definition of Job Costing: "For a typical job, direct material and direct labor are tracked at their actual values" - Wikipedia.com. A little more detailed description really brings it all together: "a method of cost accounting by which the total cost of a given unit or quantity is determined by computing the costs that go into making a product as it moves through the manufacturing process" - Dicitionary.com.
Business Management Software is more involved with accounting, inventory control, customers/vendors, and order processing. In the definitions above, it is easy to see that a large part of Job Costing is going to contain the various aspects of Business Management Software.
Many companies face the "islands of information" pain where you have different software programs operating independently of each other. This can cause hours of duplicate or even triplicate entries into the different systems. How much extra do you spend on inefficent processes just to be able to see what you have available in cash or inventory? We'll discuss even more of the problems faced by not having your data contained in one integrated software system.
The Goal
Profitablity! If you aren't making money, you're losing money! The ability to see when and why you are making, or losing, money should be the ultimate goal for your Job Costing Software. Many companies aren't able to track labor, not to mention labor allocation to a specific job. More often then not, these companies don't know what each of their jobs cost, or whether their jobs are profitable. The problem usually ties back to multiple systems that aren't integrated; "islands of data".
It is important for any system to analyize the actual costs of a job. This means all of the costs, not just labor and materials. How much do you spend on outside processing? Do you have overhead expenses, and are you applying those expenses to jobs? What about non-stock items you buy for a job, are your tracking those costs? The point is there are many costs being generated by the work you do. If you don't have it dynamically linked to that job, you aren't getting a true cost for that job. How many jobs have you done that you lost money on, but you didn't even know it? Then estimated the next job with that inaccurate cost, just to lose money again?
Now for the "easy" part. You have figured out that profitability is linked directly with knowning your actual costs, and hopefully making more in revenue. The next part of your Business Management Software needs to include the ability for you to plug in what you estimate those actual costs to be for your next job. This shouldn't be a manual process. The software you purchase should have a way to create templates and apply those templates to the job. From the Job you manipulate the data to reflect your customers specific requirements. I'll explain the benefits to automating these processes next.
The Backbone
A good Job Costing or Business Management System should facilitate automation in your business processes. If you have ever had to search for a Purchase Order, find out what has been billed to a client, or any number of non-value adding activites think of what that cost you. Sure taking five or fifteen minutes looking isn't that bad. Doing that once a day for a year is about $2,400 on the low side. What if you have five people who do it once a day, maybe more? Integration and trackability are vital to keeping the data accurate and your business profitable. Ease of use also plays a large role in trackability. Having the ability to do something, and being able to do something create two completely different results.
In todays world auditability is more crucial to a business's success than ever. I see many companies struggling to grow and expand their business simply because they can't comply with their lenders, vendors, or customers. Many lenders either have or will be increasing their requirements for loans. Being able to audit the information with a proven business management system enables you to meet those requirements. The same holds true with vendors or customers who have special requirements. You need software that supports your decisions and enables you to meet your business requirements instantly and accurately.
