What Might I Have To Change To Become Standardized?
To get to a standardized set of financial processes, we believe there are some very basic requirements:
1. Adopt a standard chart of accounts that all your current accounts can roll up to. Big numbers are more telling of what needs to be done. We have a standard set for you.
2. Tie all items you sell to specific GL accounts classifying Equipment, Parts and Labor separately.
3. Recognize revenue based on production delivery method; when goods and services are delivered. This aligns income and expenses in a way to optimize decision making.
4. Ramifications: you will need to carry inventory as an asset on your balance sheet and also be able to track client deposits on the balance sheet. Our method requires accrual accounting not cash based accounting.
5. All projects get entered into QuickBooks as estimates and are tracked through completion, frequently (near daily) updating labor, parts and equipment events.
6. Track requests for payments and overdue balances on a proactive basis.
7. Adopt a weekly internal meeting discipline to review key measures and improve team communications.
These basic processes are the foundation for running your business better.