This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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Setting up jobs
It is important we capture the necessary information on jobs when they are set up so we can get accurate reporting on them. Accurate reporting allows us to easily identify which jobs are at risk of going over budget, and which jobs might miss their deadlines. By understanding which of our jobs are at risk, we can take the necessary action to minimise the extent of the write-offs and therefore improve the performance of our practice.
Before our staff start working on a job, it is important they run a few checks to ensure the job is set up in a way that allows us to report on how it is progressing. It should not take any more than one minute to run these checks and will massively improve the level of reporting you will get while the job is in progress, and once the job is completed. Here are the three checks that must be done:
- Ensure job budget is entered
- Ensure estimated times are entered against tasks
- Ensure job manager is entered
Estimated times on tasks are the next thing to check. The job manager should then review all the estimated times on the tasks and ensure the times are reasonable and represent the amount of time required to complete the work.
Estimated times do not have to be perfectly accurate, but they do need to be given some thought. The job manager should use their best judgement to guess how much time each task should take. This is useful for reporting on actual vs estimated times.
The estimated times are also used for your budget apportionment if you are using Link Reporting. The budget entered into the job will be apportioned across all the tasks relative to their estimated times and default task billable rates. This allows you to easily track if the job is projecting a write-off, so you can address those jobs that are at risk.
Let’s look at an example:
Say we have a job that has a $1,200 budget. There are two tasks on this job, both with the same task billable rate of $150 per hour. The first task is ‘Annual Accounts – Preparation’, which has an eight-hour budget. The second task is ‘Annual Accounts – Review’, which has a two-hour budget. So a total of 10 hours budgeted for this job. Link Reporting will take the budget entered on the job and apportion it to these two tasks relative to their estimated times and billable rates.
- Annual Accounts – Preparation has 8 hours at $150 = $1,200
- Annual Accounts – Review has 2 hours at $150 = $300
- Total budget for the job based on the tasks is $1,500; the job budget, however, is $1,200
- Annual Accounts – Preparation will receive $1,200/$1,500 of the budget, which is 80%
- Annual Accounts – Review will receive $300/$1,500 of the budget, which is 20%
- Actual job budget is $1,200 so the tasks will receive $960 and $240 respectively.
This apportionment is done automatically by Link Reporting as long as the budgets and estimated times are entered. This allows us to easily track the billable value on each task budget it has been apportioned, which enables us to easily identify jobs that are at risk.
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