There are many benefits of doing projects based upon a cost-plus billing basis compared to lump sum contracts.
The major benefit is that you’re guaranteed to make money as long your client is willing to pay for all your costs incurred on a project
The two most important procedures to have in place are:
- A contract that accurately explains your method of accounting for tracking of costs and the format of your cost-plus invoice.
- A system in place to accurately capture those costs and to provide invoices that are easy for your clients to understand.
It is important to understand, that it is all about client’s trust. If you double bill your client you’ll lose trust. If your bill is wrong or isn’t accountable, you’ll lose trust. Once you lose trust, you’ll probably struggle collecting payments.
The best way to account for your costs is to implement an automated job cost accounting system that handles cost plus billings and has the following features:
- An integrated job cost system that includes a job cost, accounts payable, receivable, payroll and general ledger module:
- A job cost module that:
- Allows you to enter in:
- Budgets by category of work for the original budget and subsequent change orders.
- Predetermined project’s billable rates along with markup percentages for those costs or fees for managing the project\
- Captures all your cost transactions
- Allows you to enter in:
- A system that captures the costs from the original source, which includes:
- Time cards from employees for labor costs
- Invoices, checks and/or credit card transactions for material and subcontractor costs
- Pulls transactions from the job cost system into an accounts receivable module to create professional looking cost-plus invoices easily and quickly in seconds
- Once the client’s invoice is created, the transactions are tagged billed so your clients never get double billed.
Contractors Software Group has been developing construction software since 1995. We’ve developed job cost accounting products that expedites the processes and procedures for handling cost plus work and other billing formats. We guarantee our job cost accounting software will expedite your job costing, billing, bill paying, payroll and financial reporting so you can run a successful construction business.
For more information, please go to our web site at https://contractorssoftwaregroup.com/job-cost-accounting-software/
You’ll be glad you did!
