In This Issue ....
It occurred to us that most CI companies free fall when it comes to nailing down what they will revenue for the coming month. Most have not worried about it, because what happens will happen, right?
Well, we have found that the companies who have weekly production meetings and who worked the forecast on the front-end; believe it or not; get better results!
We think the REVENUE process can be managed daily (in fact we believe SALES and COLLECTIONS can be managed daily as well) (a topic on another future coffee).
What does one need to know to forecast monthly REVENUE more accurately each month?
Here you go:
1. A list of all active open projects (and their unbilled balances too).
2. By project what equipment can be delivered during the coming month.
3. Which projects are just starting where the parts REVENUE can be billed to the project in full.
4. The hardest part is to determine how much labor can be billed in the coming weeks. You know by experience that it is rare to bill over 50% of the hours available from all your techs. A simple scheduling worksheet Listing the project (total unbilled as of the 1st), Parts to be billed, Equipment to be delivered, and Labor scheduled for the month (how many workdays does the month have).
5. Given there is likely 25 projects or less in a given month, this should not be impossible to do.
The worksheet could look something like this:
DAILY UPDATES KEEP YOU ABREAST OF THE PROGRESS TO THE FORECAST.
You could add a note section for misses or delays that affect the actual delivery.
Projects added in the month that might get completed or carried over can be
The workbook forecast could be quartered or fifthed into weekly delivery of the same three components (equipment, parts, labor).
Lesson learned: do not wait until everything makes it thru the accounting cycle to know where you stand. Learn continuously from how things fall project to project. Soon you will be as accurate as you can be providing, more guidance to the business and not losing opportunities.