Cost codes again! Last week I took a pause to talk about Intersolar. This week I want to talk about job costing strategies. Such strategies will be greatly impacted by the software your accounting team uses. Construction specific software like Masterbuilder tracks everything from labor hours, labor rates, to material costs and taxes. Less specific software like Quickbooks keeps the job costing a little more general. So I think the trick is to determine what you and your team want to know and choose software that enables such knowledge. As a quick reminder, cost codes are a way to track specific groupings of costs within a subset of projects. Job costing similarly is a method of tracking specific groupings of costs within a project but it also involves comparing those groupings between the budget and the final real costs.
Shameless plug here: PVBid adapts to the nuances of each company, so the cost codes port easily to and from your accounting system. You can track costs in a way that make sense for the accounting system and you can still interact with your bidding in a way that is more intuitive for solar. So, again, carefully considering how you will be extracting data from your accounting system is important and should heavily influence the cost code divisions.
Let’s dive into a few common accounting systems used by folks within the industry. Hopefully looking at each of these will give you an idea of how to look at your software, and give you some ideas for your own job costing strategies. A lot of the online software options have plugins that also deal with cost codes much more effectively.
Quickbooks
Ah terminology. Quickbooks doesn’t actually have Cost Codes. You have several options for workarounds depending on the version you use. Two are “billable expenses” or “QB Items”. This is a simplified and not-quite-the-same-as rendition of job costing. Get into the system and make sense of how the different types of tracking work to find the right one for you. Here is an article about job costing strategies for Quickbooks online.
Sage
Sage is a full fledged construction style accounting system. The system features a clean cost code overlay with 6 numeric digits to be used with job costing. Keep in mind that accurate information from the field is more likely if you minimize the codes the field folk have to use on a daily basis. Take a look at this PDF on setting up cost codes within Sage.
Xero
Although not quite mainstream, Xero grows in popularity. They have a lot of great invoicing and accounting features. But, as far as I know, they don’t have the ability to track job costs. When last I played with Xero, they had tracking functionality that was a little clunky but would allow you to categorize specific costs. I did a little research and found this thread on the job costing topic in their community forums.
I’ll leave you with that very broad and basic survey of the three major types of accounting software. Next week we can look into cost code strategies for your company. These strategies will greatly influence how you will approach your accounting system too.
Accounting software for the solar industry is a tough subject. Comment below on what you use and why. I’d love to hear how you have sorted out the job costing challenge too!