Before any job management software is set up, it’s a good idea to put together a a scoping document or some form of plan on what your business is trying to achieve. At the very least it is essential to clearly define the business needs for quoting through to job types and most importantly, reporting outcomes. To do this it is important to involve management, project managers, estimators and critical financial resources, providing input at every level. I have spent hours if not days with companies defining and refining cost centres and business groups to get this right. But if it is set up right, all processes from a quote through to management reporting will run smoothly across all systems.
The set up process can be compared to setting up anything. Without planning and correct implementation, the pieces of the pie just don’t fit together and can end up disjointed and achieve less efficient results.
simPRO’s cost centres are the centre of all work from estimating correctly through to reporting financially, both at job management level and in the accounting software. The cost centre essentially defines the job type leading to all reporting levels.
For project jobs in simPRO you can pick multiple cost centres and redefine them. For service jobs, however, you only pick one cost centre and it is therefore very tempting for companies to add 20 or more cost centres to cover every possible option. It is not necessary. With a little forethought and planning you can discuss and scope out what is really needed. Is it, for instance, better to have one cost centre called service and then define the area within the business using Business Groups and tracking in Xero? Let’s take an electrical company as an example:
Jo Bloggs Electrical wants to compare results in 5 regions:
- Victoria & SA
Their main headline services are split between:
- New Homes & Renovations
Each of these have multiple products and job types for example Domestic will have services such as:
- Ovens and cooktops
- CCTV security and lighting
- Power points
- And more…….
Look at the past requirements. Has the business ever analysed results in fine detail? If you don’t really need to report on power points and lighting and can ascertain this from stock then perhaps that area can be joined with another or not reported on at all.
In the example above we would suggest that the most effective set up would be:
- Create business groups for the 5 areas of business.
- Create cost centres for the headline services
- Create tags for the more defined split
The job types and headline services are not needed to be defined in the final accounts but it is important to determine income and expenditure in each region. By splitting it in this manner all the listed services and types, cost centres and business groups can be reported accordingly directly in simPRO with its sophisticated reporting options but this example will provide Jo Bloggs Electrical with the comparison of financials in regions in Xero. They will auto populate individual P&Ls for comparisons as well as be collated as one. The regions have overhead expenses which will only be entered and reported on in Xero. So by using Business Groups and matching tracking in Xero, Management can now review the entire progress of each region both at gross margin level and across the board.
Setting up the right grouping is the first step. Ensuring they have been correctly implemented in simPRO with related tracking groups in Xero is the next task. A Business Group sits in front of a Cost Centre and so increases the number of cost centres but they can be grouped for ease of use.
Now what will happen if it is set up with Xero in mind is that the mapping to the accounts will be to one income and one direct cost but in the background it will automatically be split into separate P&Ls for each of the regions.
Our team has found that working meetings discussing the importance of the split and outcomes are paramount. Working through what is required both ends is ultimately one of the most important areas of implementation or set up. There are so many different scenarios and options and it is easy to make a mistake and have to redefine everything again moving forward.