In-house expenses & internal charges-- why bother You do a lot more than spend time working on your clients' behalf. Lots of money is spent on various supplies for your clients' jobs, too. Zip disks, CDs, mat boards, firies, color scans, faxes and video tapes are some of the items you use. What's the best, and easiest, way to track these items, when usually they've been paid for days, weeks or months in advance of your using them on a client's behalf? Answer: By using in-house expenses & internal charges. -- If you don't charge for them, you're losing an important source of income (not to mention just covering costs) for your shop. -- You may think the net costs amount to only pennies on individual items, but marked up amounts are substantial when you consider all the supplies you use or produce. -- The best way to handle entering these items is for staffers who use them or create them to add them as they are done or used. -- Accountants can relax because the costs don't affect the General Ledger until billed to the client. Give each artist the access to enter their own in-house expenses or internal charges. -- When charges are entered immediately, artists don't have to make notes for someone else. Or even worse, completely forget about the charges. Entering these items in a timely fashion increases the chances for accurate job costing. And job report are more meaningful because they reflect all costs associated with a job as they happen.

By John Duffy

When job costing, what is a key ingredient? I'll give you a hint: It could be small or it could be large, depending upon the client or task involved. It's your markup. Markup is a percentage by which all outside net costs are multiplied. It helps you collect enough extra money to begin building job profit.

     A recent Clients & Profits survey showed that 30% of shops using C&P regularly charge 25% markup or more (up to a high of 36%). Are you still charging 17.65%t? It is time to start collecting more!

     In Clients & Profits, cost markups are set up by task or client. Client markup overrides all other markups, so if you've promised a special markup to a specific client, Clients & Profits tracks that automatically. Markups flow where needed as you do data entry, so you don't have to remember what markup to charge. Of course, markup can be edited, if necessary, at the job ticket or data entry levels.

     A job cost type of Accounts Payable invoice can combine both job cost and

overhead charges. For overhead distributions, use the word "NONE" for the job. Clients & Profits then skips task, markup and gross. When distributing to jobs, Clients & Profits knows to use your markup to produce gross amounts.

     Sometimes, especially for big ticket items, clients pay a vendor directly. For jobs to correctly reflect profitability, enter an A/P invoice as usual with markup. To remove that invoice from your vendor aging, add a vendor credit with the credit GL assigned to the "suspense" (i.e., 999998) account. Then add the amount that the client paid directly as a client retainer payment with the debit GL to suspense.

     When the job is invoiced, apply the amount of the retainer payment to the billing. What remains to be paid by the client is your markup.

     Viva la markup!