Masonry Magazine May 2003 Page. 40
Accounting
accommodates revising sales in the current accounting period when a prior accounting period has been closed, and ages the sale properly.
A nice aging report is a necessity and besides the typical Current, 30-60 day, 60-90 day and over 90 day columns, the aging report should also display the actual number of days old for each open receivable.
There should also be a provision for recording all of your contacts for each job such as a person's name, billing address, phone, fax, e-mail, etc., and for recording your comments regarding phone conversations when trying to collect monies due.
The interface of AR to the General Ledger should be automatic and should default to what has been set up at the job level. And the cash receipts entry program should allow you to record deposits against multiple bank accounts and provide for the ability to credit job cost directly.
General Ledger (GL)
The general ledger module is pretty basic in that it merely captures the transactions that are generated from all of the other accounting modules. If you do not require a lot of detailed transactions within certain accounts, the software should provide for summary posting capabilities from the various modules that interface with it.
At the end of the fiscal year there should be a procedure to automatically close all the income and expense accounts to retained earnings. There should be no limit to the number of accounting periods that you wish to create within a fiscal year or the number of fiscal years kept on file. If your fiscal year does not coincide with the calendar year, make sure the software handles that.
Some systems will come with financial report writing software. If generating in-house statements then be sure to check this part of the program out. It is also nice to have the ability to set up a journal entry as recurring. Finally, you should be able to set up budgets for your expense accounts and generate reports comparing budget to actual costs.
Job Cost (JC)
A good job cost module is crucial to your business! Not only does it track your work in progress, but it can also
MASONRY: A UNIT-BASED BUSINESS
The secret to tracking, controlling and producing more profitable projects is through "Production Rate." Basically, the Production Rate is the number of units per day that one mason can install. Related to the Production Rate is the right mix of masons, labor and supervision to produce the most cost efficient crew. How do you track this in your accounting program though?
After estimating takeoff yield units, we review similar projects and, using our expertise and experience, come up with the most appropriate Production Rate and crew makeup required for the job. Masonry-specific estimating programs often use this production rate/crew building technique.
After one week on the job, the first things you want to know are: How much was our production? What was our unit-labor cost? Did we make or lose money?
With the answers to these questions we can make the changes needed to maximize our success.
The accounting software your business uses must be able to record and store several essential job-costing facts. Most accounting programs will track labor hours and expenses, but we're also wanting to record units installed, separate productive hours and support hours, and be able to track all of this information on a daily basis.
Production and unit-labor cost tracking can all be generalized into three decreasing levels of sophistication and field reporting requirements. Often the size, duration and difficulty of the job will determine which level is most appropriate for each project. With that in mind, let's review the three tracking levels, in reverse order, with the one requiring the most field-supplied information first.
LEVEL 3
With this level, initially a budget is produced, including units to install, productive hours needed for those units, and dollars allocated to complete the task. Each job foreman keeps track of who has worked on which task for how many hours and how many units got installed during that reporting period. Experience shows that data are most accurate when it's reported at the end of each day. Once inputted into the accounting software, daily production reports are immediately available comparing and projecting that day and week-to-date production rates, costs per installed unit, and final project profit or loss.
With this level of tracking, you should make sure that your accounting software is designed to keep Week Two's data separate from Week One. Your software should also have the ability to keep mason hours separate from labor hours, track installed units, keep each day's information separate, and have up to 12 days of data available at any one time, depending on how long after the period ending date that your payroll gets processed.
LEVEL 2
Level 3 is the most comprehensive and detailed way to track your projects. However, sometimes either the job does not justify that level of tracking or the field crew is not capable of providing that much information.
Under the Level 2 type of tracking, the only information we are losing is who specifically performed each task. On union or prevailing wage jobs where all of the masons earn the same wages, this tracking is almost identical to Level 3. Rather than entering