By Mindy Williams

Knowing where profit is coming from is just as important as knowing how much profit you've made," asserts Dawn Jaworski of Gabriel Diericks Razidlo. "You need more than a basic financial report that adds up billings, subtracts job costs, and lets you know if you have enough left over to pay your staffers and vendors, (not to mention wallpapering the executive bathroom)!"

     What about monitoring profitability as jobs progress? How about analyzing profitability from various perspectives? The accounting department would kill if you made them crunch all those numbers more than once! It's all they can do to get the billings out, right? (Not using C&P yet, obviously.)

     Think of the benefits of being able to easily analyze any particular job or range of jobs at any point in time, and from a variety of perspectives. If analyzing profitability is this easy, it allows for more time focused on the only two ways to improve profits: get more clients and bill them for more jobs, and know where you're spending every dollar and correct any misspending.

Two types of profitability

     "Don't rely on just one type of profitability report to keep you informed," suggests Yvonne Westergren of DiBona, Bornstein & Random. Job profitability is focused on job costs and job billings. Profitability reports that focus on just jobs are important because they show profitability details. Details help you determine what went right or wrong on a given job

     But job profitability shouldn't be your only focus. Agency profitability is the bigger picture. It's based upon income and expenses for everything-whether job related or not. If you are not covering your overhead, you won't last long. Once you factor in overhead, you may see that clients which looked marginally profitable from the job perspective, go into the red. Perhaps billing rates are too low for a certain client's production jobs. It's time to renegotiate their billing rates!

Painless profitability reporting

     How can you possibly produce detailed and meaningful profitability reporting without driving your accounting department to its limit? The answer is one software, Clients & Profits. Clients & Profits software is designed to replace your existing accounting and production systems, including manual ones. Everyone shares one database, entering their work whether they are accounting or production oriented. One result of the work process is the ability to produce a variety of meaningful, detailed profitability reports.

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