When you’re running a business, you may feel like you’re guessing at which decisions will be best and what’s going to make you the most profit. But what if we told you that there’s a way you could get definite answers about what is and isn’t working for your company?
Job costing software can help you make sure your business is working smarter, not harder. Read on to learn more about what job costing is, the benefits it can bring to your business, and the right software to make it happen.
What Is Job Costing?
Job costing is a method of accounting that lets you track the cost and profit from each job you do for a customer. It looks at every cost involved with every job you perform. This can include employee direct wages, materials, subcontracting, manufacturing overhead associated with running your business in such a way that you can perform this job.
This method also takes a close look at every single profit you gain from each job you’re doing. This can include direct labor, materials, subcontracting, and manufacturing overhead. It uses these numbers along with sales revenue from the job to break down exactly how much net profit or loss you’re making off of each and every job.
Job Costing vs. Process Costing
There’s another accounting process similar to job costing that’s called process costing. With job costing, you’re looking at net profits or losses for individual jobs. But process costing takes a look at the expenses and profits of processes that you repeat over and over again for a job.
Process costing can evaluate whether business processes like mass production are working as well for your company as they can. Once you have the overall process cost, you can look at the number of items you’re producing and determine an individual item cost. This is a quicker way to set accurate pricing for mass-produced items.
How Is It Used?
In general, job costing is used to evaluate your pricing and your business decisions to make sure you’re making the best choices for your company. For example, let’s say you have a piece of large machinery that could do with being replaced but you’re trying to decide if it’s worth the investment to buy a new model. Job costing can help you determine exactly which will be more profitable.
You can look at the amount you have to spend on repairs to keep that large piece of machinery running for each job that you do. Consider the cost of replacing it and divide that out over the number of jobs you expect to have in the time that machine is expected to last. Then you can figure out which will cost you less money and move forward, confident that you made the smartest decision for your business.
Why Is It Important?
Half of all small businesses fail within their first five years of operation. With odds like that, you need to take every step you can to make sure your business is a success. And having your accounting working as efficiently and accurately as possible is a huge part of that.
If you’re guessing about what’s going to be profitable for your company or making business decisions based on how you feel about them, odds are you’re going to wind up in that half that fails. Job costing can help you make sure you’re making the best financial decisions for your business. This can help keep you in the black and growing year after year.
Using Job Costing to Increase Profits
Job costing can do more than just keep your business afloat, however. You can use job costing to increase your profit by maximizing the efficiency of your operation and optimizing your prices. Lower costs and higher income means everyone goes home happier at the end of the day.
With job costing, you can eliminate extraneous processes or positions. You can take on the jobs that make you the most money and use the most cost-effective methods to get them done. You can also use your costing analysis to give customers the best price for your services, hitting that sweet spot between outdoing the competition and earning enough money to give everyone a good paycheck.
What Is Epicor ERP?
If you want to start job costing in your business, you need to take a look at Epicor ERP software. Epicor ERP is an enterprise resource planning software that is designed to help you manage information. Excel spreadsheets aren’t cutting it anymore. If you want to stay competitive in today’s business world, you need to have information at your fingertips.
ERP systems integrate all your business information into one platform that can be easily accessed across systems. This can help you automate and streamline back-office tasks, help employees become more productive, and give you real-time visibility into your business operations. And if you’re planning on doing any job costing, you’re going to need that in-depth view of what’s happening in your company.
Job Costing in Epicor ERP Software
If you want to make job costing work for you, it has to be efficient. You’re going to waste more time and money than job costing will save you if you go around making notes of prices on a legal pad. You need a system like Epicor ERP to keep all that data at your fingertips.
With Epicor ERP, you can quickly and easily look at information from every department and level of your business. You can run expense reports on all those departments, quickly analyze profits, and figure out which departments are doing better than others. From there, you can figure out which jobs and processes are working better for your company and start implementing better work strategies, all before lunch.
Discover the Best Job Costing Software
Using job costing is a great way to make sure your business is running at its best. And with Epicor ERP, you can have the best job costing software to help you in that endeavor. Give it a try and start working smarter today.
If you’d like to get help setting up your Epicor ERP system, get in touch with us at Tomerlin-ERP. We provide top-notch Epicor® ERP consulting to help you get your system up and running as smoothly as possible. Contact us today to get your Epicor ERP system rolling and start saving money.