Manufacturing and QuickBooks (Job-Shop and Made-to-Order)

Job shop and made-to-order manufacturing operations bear a remarkable number of similarities to trade contractors and/or custom builder construction companies. I.e., in both cases:

A customer orders a specific product and/or needs a set of related actions to take place.
It is highly likely that specific materials will need to be ordered and/or sub-contractors hired for the particular job.
Employees are assigned to, work on, and may incur additional expenses related to the job.
A complex series of job stages or actions take place to produce the final product and,
If management wants to know the profitability on the job, income and costs (including labor costs) must be recorded and attached to that job.

Another similarity exists between construction and job-shop and made-to-order manufacturing in that, in most cases, the cost of the job does not move into the income statement until the job is complete and sold/transferred to the end purchaser.

Like trade contractors, you probably carry significant inventories that can also be applied to the order or job at hand, and you may also assist in the installation and/or support of the product subsequent to installation.

Because of the unique nature of the services you perform, and the price volatility on products that you purchase and use, you are constantly at risk for time and cost over-runs and thin gross profit margins.

To balance those risks, you need accurate job-cost information so that you can:

Track jobs’ progress and monitor financial results.
Keep an eye on changes that impact your profit margins.
Be in a position to make informed decisions as jobs progress.

Additionally you may need to develop a system that can help you:

Create basic estimates
Enter incoming product orders
Record inventory as it is used
Record sales and sales taxes due
Monitor inventory levels and use taxes due
Assist with purchasing

The most important benefit of accurate job-cost and overall company financial and profitability information is the ability to shape your own financial future. How?

When you are intimately familiar with your job-cost and company’s financial numbers, you’ll be able to create more accurate estimates and make smarter buying and pricing decisions.

That’s the real way you can truly make a permanent and lasting change in your bottom line!

At a minimum, you probably want to use your accounting system to:

Assign materials, sub-contracted, and other production costs to jobs.
Assign payroll and payroll tax cost for direct labor employees to individual jobs or products.
Track Estimate vs. Actual results (by job stage) for jobs.
Record inventory purchases, use, and re-order points.
Perform a variety of basic accounting functions within an integrated accounting system (e.g., Accounts Payable, Credit Card Entry, Write and Print Checks, Invoicing, monitor Accounts Receivable, 1099s, Basic Estimates, etc.).
Create a variety of financial reports that will provide information to help run the business more profitably.

You may need (or wish) to utilize more advanced features such as:

Sales Orders (Work Orders)
Purchase Orders.
Budgeting.
Payroll preparation and related tax filings.
Fixed assets tracking.
Customizing and printing Forms.
Using QuickBooks® to assign fully burdened labor cost to jobs.

Additionally you are probably looking for a system that:

Can be customized to match the specific way that you do business.
Can be managed in-house by trained accounting staff.
Is reasonably priced, with minimal maintenance fees.

Fortunately, QuickBooks® and/or QuickBooks® Enterprise is an ideal match for most job-shop and made-to-order manufacturing companies IF Lists are properly structured and IF bookkeeping staff is trained in various specific aspects of job-shop and made-to-order manufacturing accounting and reporting.

Lack of knowledge regarding these crucial accounting and business topics causes numerous errors and frustration, and can cost a business literally hundreds of thousands of dollars in lost revenues and excess cost. But we can help you solve a majority of the typical concerns faced by job-shop and made-to-order manufacturing companies through focused training and, if necessary, by providing additional assistance from qualified accountants and Certified QuickBooks Pro Advisors.

With our training services we can provide you with essential basics as well as advanced QuickBooks® applications knowledge. We bring thousands of hours of hands-on QuickBooks®, job-cost, and job-shop and made-to-order manufacturing accounting experience to the table in these subjects.

We will help you discover how to build your QuickBooks® system to provide you with the information that you need to make more informed, and more profitable, operating, estimating, and pricing decisions for your job-shop and made-to-order manufacturing company.

We offer one-to-one support and consulting services to clients throughout North America, and industry-specific QuickBooks online training seminars as well.

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