When your firm adopts project accounting—the practice of accounting on a project-by-project basis—you’ll get insights that’ll change the way you do business. You’ll understand your projects, employees, clients, and firm on a deeper level, and you’ll be able to make changes that will dramatically increase efficiency and profits.
Before this happens, though, you need to lay the groundwork. With the right tools, logging and making sense of the data you need is convenient and easy. You just have to be consistent.
Develop the Habit of Tracking Your Time and Expenses
Time and expense tracking is foundational for analyzing any type of business that works on a project basis, especially architecture firms. Even if you charge fixed fees for your projects, you could be missing out on hard-earned cash by not tracking your time. You need to make sure you charge enough to cover all the effort that goes into your projects.
After all, it’s hard to know if your projects are even profitable without examining the resources that went into them.
Find the Tools to Make It Simple
Despite the importance of managing time and expenses, it’s never easy to get your employees (and, let’s face it, yourself) to fill out their time cards. Find software that gives you flexible tracking options, like timers and intuitive time cards. A mobile app will make things even easier. Ideally, you should also be able to centralize all of your information that’s related to those time and expense entries by attaching notes and documents to them.
Assign Staff to Projects, Phases, and Tasks
It’s worthwhile to see how many total hours an employee worked, but it’s even better to specifically know what they were doing. You should start with assigning your staff to the appropriate projects, phases, and tasks within your software.
This is one of the ultimate solutions to the questions, “What is everyone working on?” and “What am I supposed to be working on!?!” With a list of the right assignments in front of you (and pre-populated on your time card), organization is easy.
Combine Time, Expenses, and Projects with Billing and Accounting
Depending on how you work, the above types of data might be considered optional when it comes to keeping your business healthy (even though we disagree). However, everyone has to do billing and accounting.
Putting your billing and accounting data on the same platform as your time, expenses, and projects will make many kinds of analysis infinitely easier. You’ll make billing decisions in real time, prevent budget overruns, understand your staff’s workload, and properly manage your cash flow. Forecasting, budgeting, and even hiring will be more straightforward when you can properly predict—and optimize—the amount of cash flowing into your firm. Moreover, your clients will appreciate your accurate estimates, realistic timelines, and improved efficiency.
All of these benefits come from an essential foundation. And with the right project accounting software, it’s easier than ever to lay it.