Owners of service businesses often discover that there is little free time available for the pursuit of personal recreation and relaxation. There are actions that can be taken to streamline operations in order to free up time for other activities.
Implement Automated Daily Time and Expense Entry
The backbone of a service industry is the proper and accurate tracking of time and expenses related to the project. Manual tracking of time and expenses can result in lost revenue. Implementation of daily electronic time and expense entry by each employee that can be accessed 24/7 on the internet can streamline and automate the capture of all billable and non-billable time and expenses. In addition, the time and expense entry can be integrated into the payroll and accounting system, thus reducing the need for additional data entry and streamlining critical information needed for the operation of the business.
Automate Billing Terms
Many service companies negotiate the billing terms with their clients on an individual basis, depending on the contract agreement. This often results in multiple billing methods, payment terms and billing rate structures. The billing process often becomes labor-intensive, time-consuming and prone to errors. This manual process can delay invoicing which can, in turn, delay payment, reduce client satisfaction and decrease finance productivity. The solution is to obtain an accounting system that can handle the multiple billing issues and automate the billing process.
Improve Cash Flow through Progress Billing
Due to the fact that services are normally billed after the work is complete, there is often uneven cash flow. The payroll costs and vendor and subcontractor invoices are due prior to the time that invoices go out to the customer/client. If the daily time and expense entry is implemented at the employee level and this information is integrated daily into the accounting system, management can gain valuable insight into the amount of unbilled work-in-progress that can be progress-billed, thus reducing negative cash flow of a project.
Utilize Project Management
Another accounting feature that should be invested in is project-tracking. If costs are allocated to the various service projects, then real-time reports can be reviewed to determine project performance and status. Accurate information and analysis can reduce cost overruns, increase profitability and increase client satisfaction. In addition, the review of a project's profitability can help with creating realistic budgets, presenting accurate bids on future projects and making strategically sound decisions. The project tracking should be seamlessly incorporated in the accounting system, not through a stand alone application for project management. The standalone concept, at first glance, may seem to be more cost effective; however, this can lead to increased errors, operational inefficiencies, and decreased productivity, project visibility and profitability.
By implementing an integrated approach to accounting, the company can achieve real-time visibility into project and financial information, maximize revenue by improving project profitability and billing, and increase staff productivity which can delay or eliminate the need for future full-time employees. The improved automated daily operation of the business will reduce management's time involvement and allow more hours for the pursuit of happiness.
