Bookkeeping Case Study – Contractor

Bookkeeping Case Study – Contractor

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Case Study – Contractor

Client

A custom home builder who has been in business for 5 years.

Challenge

A typical project would last 9 months to a year for them and they would have 3 or 4 running simultaneously. Although they were getting the top line revenue numbers, there was no profit left at the bottom of their financials.  Cash flow also tended to be a problem as the projects progressed.

Journey

They expanded their quoting process to include more detail in order to capture all expected expenses, and began tracking their expenses against individual jobs, so that they knew which ones were profitable.

Discovery

By matching their material and labour expenses to individual projects they discovered that although some projects were profitable they were only making $15,000 on a $2,000,000 project.  The bigger challenge was that they didn’t know where they were quoting incorrectly to in order to rectify.

Solution

We conducted our assessment of their current workflows, systems and quoting process.  We introduced a 3rd party product called Knowify into their workflow, as well as integrated it with their QuickBooks Online Accounting software.  Our first step was to move the quoting process into Knowify and broke the projects down into 35 phases.  Each phase was assigned an associated cost.  Everything was templated so as to be easily duplicated for the next project to be quoted.  As Purchase orders and labour hours were assigned, they were now attached to individual phases of the job, rather than the job as a whole.

Results

The results were almost immediate and beyond the expectations of the client.  The automated quoting process shortened the amount of time that the sales people were spending on preparing a proposal. The electronic signature features allowed their business to appear on the cutting edge of technology to their clients.  Knowify’s scheduling ability allowed them to optimize their team, and reduced the non billable hours of the collective team.

The greatest result however, was the ability to identify that by month 3 of the projects, they were losing money.  We were able to pinpoint the exact phase of the project where they were eating through all of the profit margin.

The other side effect of integrating this application with their Accounting software was that Progress Invoices were issued on a more timely basis to reflect the costs being incurred, and the business was no longer carrying the burden of the project with their internal cash flow.