Client Profitability Reports Users Guide

Transcription

1 Client Profitability Reports Users Guide

2 Overview Advantage Client Profitability Reports and tools are based on industry standards with the goal of helping agencies address issues of profitability using the information already contained in their operational system. These reports and tools are designed to eliminate dual entry and manual or Excel-based reporting. Client Profitability reports are in place to measure things like client profitability for production and media at various levels including the project level. These are areas of management that tend to be more subjective than standard financial reporting and require that account service managers, business managers and financial personnel be involved in order to ensure success. There are literally many different reports other tools available in Advantage. This document is designed to help you understand the functionality available. Client and Job Profitability Reports These reports are designed for managers to gauge how profitable clients are in general, but then allow for a more detailed view by job to help identify problem areas. Both types of reports allow for an automatic allocation of overhead. Client and job profitability are measured in many different ways and can also be compared to budgets. Client Profit and Loss reports are designed to tie to the general ledger financial statements for the categories reported upon. Client Profit and Loss Report Detail There are several versions and formats available. Before printing a report, it is important to know your options and how the report information is gathered. The data included on these reports is created through processes like: Accounts Payable, Employee Time Entry and Production/Media/Fee Billing. The Management Reports application allows you to define the criteria for which report data is gathered. This includes the general ledger accounts from which overhead is to be gathered, and the exclusion of specified clients (such as agency clients) from the reports. Order of Processing: 1. If you plan to allocate overhead or wish to exclude agency clients on the report, you must first setup your Overhead Account Sets and Agency Clients. These two settings play a role in calculating the overall profitability by client and are both located in Advantage/Management Reports (from the main menu). Allocation of overhead is optional when running the report. 2. Located in AdAssist/Management Reports/Profit and Loss Reports, you ll need to Assign Offices to overhead account sets. This is the link between the overhead set and the various offices and must be done before running the reports. This step is not optional. 3. Located in AdAssist/Management Reports/Income Adjustments you may optionally enter income adjustments for each client/division/product by posting period. This may be used to account for accrued income by client that is not recorded in the system. This feature is Updated 3/23/13 Page 2

3 not needed if you accrue income in the general ledger and assign the proper client, division and product codes. Just make sure to include journal entries when you run the report. 4. Located in AdAssist/Management Reports/Profit and Loss Reports, select the report option(s), refresh data and then print the report formats desired (as many as you like). Refreshing of data is not necessary to print any of the versions listed. About Overhead Account Sets Agency overhead is pulled from the General Ledger and allocated to clients. The Management Reports/Overhead Accounts application in Advantage is where you define the overhead account sets that are used to pull overhead to be allocated in the Client Profit and Loss report in AdAssist. A Group Code is used so that different groups of accounts can be established. If you have more than one office, you may choose to setup overhead sets for each of them or you may choose to share one overhead set. When you print the P/L report, you can select the group code desired for the current allocation. At least one group of overhead accounts is required to process data for the reports. It is important that you understand how overhead is allocated in the reporting process because the results will vary depending on the overhead set (group code) and office assignment used. When you create Overhead Account Sets, be sure to include overhead accounts for Salaries, Benefits, and Direct Expenses (Non Billable Client Expense). If production costs for clients are written-off using our write off application, they should be written off to a non-billable client expense G/L account and included in the OH Account Set (not to cost of sales). The Overhead Account Set should not include cost of sales accounts. About Agency Clients One or more of your clients may have been set up for use in tracking agency or pro-bono work that is not billable. The Management Reports/Agency Clients application in Advantage allows you to tell the system which clients are being used for these purposes. The clients listed will be excluded from the overhead allocation, and no profit/loss report will be produced for these clients. Total direct service cost will not include time posted to agency clients; this time cost remains a part of overhead and distributed accordingly. About Assign Offices Within the Client Profit and Loss Report menu, you ll need to assign an overhead account set to each office. Multiple offices may have the same overhead set or each office may be given its own set. This configuration will determine how overhead is allocated to the offices selected for the report. About Income Adjustment Income adjustments may be entered by client, division, product, posting period. The adjustment amount is added to the gross income on all report versions. This feature may be used to capture adjustments for accruals if NOT done in the general ledger with a journal Updated 3/23/13 Page 3

4 entry. This feature is not needed if you accrue income in the general ledger and assign the proper client, division and product codes. Just make sure to include journal entries when you run the report. Understanding the Client Profit and Loss Report There are many different report options available that will affect the report result, consider the following options and select the ones that will provide the report results you need: Report Options: Office Selection: Depending on the offices selected, the corresponding client/division/products will be included. One or more offices may be selected in any order. Keep in mind the overhead account set assignments when you select which offices to include. You can only use one overhead set at a time when printing the report. Another factor is the option to Report by G/L Office. This option (when selected) ignores the product s office and splits clients by the G/L office where income was booked. It is important to select all offices in this case to ensure all data is gathered, across office codes. Updated 3/23/13 Page 4

5 Overhead Set: Select the overhead account set to use in allocating overhead. Use Assign Offices to designate which overhead set is to be used when overhead is allocated. For multiple offices where the overhead sets are different, the reports should be run separately, using the corresponding overhead set. Overhead is allocated to the offices selected for the report that have the same overhead set. Otherwise, zero overhead is allocated. If all offices use the same overhead set, they may be run in one client PL report with that overhead set. The assign office and overhead set settings can be changed on-the-fly for different results. Period Ranges: (Three period range options are available) Period Range is for current reporting year data and is used on all report formats. Select the Year-to-Date From and the Year-to-Date To posting periods. This selection determines which records will be included based on the posting period. Prior Period Range 1 and Prior Period Range 2 are for prior reporting year data. You may compare up to two prior years data on certain report formats. Select the Year-to-Date From and the Year-to-Date To posting periods. This selection determines which records will be included based on the posting period for any prior year. Sales and Cost of Sales are included based on the posting periods in which they were billed or recognized (this includes production and media). Direct Service Cost is based on the time entered date. The actual date is linked to a posting period using your posting period table in the general ledger. Direct Expenses are included based on the posting period in which they were entered. Journal Entries, Manual Invoices and Income Adjustments (all optional) are included based on the posting period in which they were entered. Break-Out Unbilled Time Cost: When this option is selected, the report includes a line just above Net Profit/Loss for the cost of any unbilled time within the specified posting periods. This cost amount is then added back into the Net Profit/Loss figure. Using this option allows you to include all unbilled time entered within posting period s date range. Include GL Journal Entries: When this option is selected, the report includes GL Journal entries posted to income and cost of sale account types that also contain client, division and product codes. The journal entries are broken out in a separate category on the report. Include Manual Invoices: Updated 3/23/13 Page 5

6 When this option is selected, manual invoices are included in the report. All types of manual invoices are included, but they are broken out in a separate category on the report. Combine Categories: When this option is selected, the categories on the report are removed and billings and cost of sales are broken down by the Sales Class, GL Description or GL Account and Description only. Journal Entries and Manual Invoices are no longer broken out separately, but there is also no separation of Production and Media other than the sales class or GL categories used in posting. Report by G/L Office Code: This report uses the office code assigned to specific general ledger accounts used in posting data instead of the office code attached to a client/division/product (job or order levels). This option is useful if you have set up your system to split client/division/product(s) and jobs into separate offices by mapping general ledger accounts at the function level in Office Maintenance. When your system is set up with this level of detail, both report options may be printed (one per client/division/product or one per office/client/division/product). Include Budgeted Gross Income on Detail Reports: When this option is selected, all detail reports include the budgeted gross income along with the actual gross income and the variance. Selection/Sort Options: **************** The selection option used determines the format options that will become available and the report grouping. Client - Select a range of client/division/products and produce a report for each client with a group total page for all clients in the range. Client/Division/Product - Select a range of client/division/products and produce a report for each client/division/product with a group total page for all in the range. Client/Division/Product List - Enter a list of client/division/products and produce a report for each client/division/product with a group total page for just those selected. Account Executive - Assign an A/E to each client/division/product and produce a report sorted by account executive and client. Product Sort Option OR User Defined Option 1 - Setup the Product Sort Option or the User Defined Field 1 in Product Maintenance. The report will be printed sorted by the option selected. Sales Class - Select all, or a list of sales classes and produce a report for each sales class. This provides profitability by sales class including overhead allocation based on direct service cost. This option cannot include Manual Invoices, Journal Entries or Income Adjustment because those items are not posted to the system at the sales class level. **************** Updated 3/23/13 Page 6

7 Direct Service Options: Select Direct Service Cost by Function to break out the direct service cost by function description. Select Direct Service Cost by Department to break out the direct service cost by the Department description assigned to the employee time entries. Use Alternate Cost to use the alternate cost rate which is based on actual salary divided by actual hours posted. This calculation is done using the Alternate Cost Rate update in Employee Update. Report Description Options: Select one of the following options for breaking out billing and cost of billing. Sales Class Located on each job or media order billed. Production Lists the sales class from the job. Print, Out of Home and Internet Media Lists the sales class from the order. Broadcast Lists the sales class from the order unless several sales classes have been billed on one invoice, then the standard media type (Radio or Television) is used. GL Description (GL Account Description). GL Account/Description (GL Account and Description) - This options is useful when comparing to what is posted to the general ledger. Standard Report vs. Departmental: The Standard Report is grouped based on the report selection option used. Overhead is allocated by Client/Division/Product or Sales Class depending on the report option selected. The Departmental Report is grouped by Department and overhead is allocated by Department. Departmental reports only include billings for employee time. The department for billings and direct service cost is gathered from the employee s department in the employee time file. Direct expenses are listed for each department based on the function code s department. Use Alternate YTD Overhead Allocation This option uses and alternative method for allocating overhead. The standard method measures direct service cost by month and allocates overhead by month (posting period) and the YTD total is a sum of each month. The alternative method calculates the YTD overhead differently in that it measures direct service cost for the entire year and allocates overhead based on the annual figure (instead of summing the individual overhead allocation for each month). This provides a more accurate view for the entire year. **************** Updated 3/23/13 Page 7

8 Once you have made your selections, you will need to Refresh the data. After refreshing, you may print one of the reports available depending on the selections made. Click on Reports to view your options; depending on the selection criteria used, report options will be available. The report containing the most detail is the Profit and Loss Report Detail version. The detail versions are listed on the left-hand side of the print selection screen. Office Options: The option to Summarize Offices or Break-Out Offices allows you to further control the report results. Regardless of the report options selected, you may print reports in either format without refreshing data again. Client Profit and Loss Detail format definition is listed below. Billing: Total Billing broken down by Category and Description. Billing: Client billing excluding Resale Tax. Note that Agency Clients are not included. Categories: Production, Media, General Ledger (journal entries), and Manual Invoices. If the Combine Categories option is selected, no category is printed. Description: Sales Class, GL Description or GL Account and Description (depending report selection). Total Billing: Total of All Billing Cost of Billing: Total cost of billings broken down by Category and Description. Cost of Billing: Vendor (cost) items billed on client jobs excluding Resale Tax. Categories: Production, Media, General Ledger (journal entries), and Manual Invoices. If the Combine Categories option is selected, no category is printed. Description: Sales Class, GL Description or GL Account and Description (depending report selection). Total Cost of Billing: Total of all Cost of Billing Income Adjustment: Total income adjustment entered through the Income Adjustment screen for selected clients and periods. Departmental reports do not include income adjustment. Rather than use this option, you may use journal entries with the client/division/product assignments to adjust Updated 3/23/13 Page 8

9 income. That way, the GL matches the client profit and loss report. Income Adjustment may be used if a JE is not desired. Gross Income: Billing less Cost of Sales, plus Income Adjustment. Departmental reports do not include the Income Adjustment. Direct Service Cost: Lists hours times cost rate (standard or alternate) for all employee time posted to client jobs (except agency clients) within the periods selected. The posting period for time is calculated based on Posting Period maintenance starting and ending date ranges. The cost rate is calculated when time is entered by the user in Time Entry. The Alternate Cost Rate is a recalculation that is done optionally in Employee Update at the end of each month and is based on the actual employee salary (entered in Employee Maintenance) divided by the hours entered (multiple options available). Direct Expenses: Lists non-billable vendor costs posted to client jobs and includes costs that have been writtenoff on client jobs. Total Direct Costs: Total of Direct Service Cost and Direct Expense. Gross Profit Margin / Gross Profit Margin %: The Gross Margin represents Gross Income less Total Direct Costs. The Gross Margin Percent is the Gross Margin divided by the Gross Income. Overhead Allocation: Overhead is gathered into what is called the overhead pool. The overhead pool is the total of all amounts posted to the general ledger accounts specified in the Overhead Set for the posting periods selected. Overhead is allocated period-by-period, not for the range of periods (as a whole) selected for the report. That way, the overhead and related allocation for each month stays consistent regardless of the way the report is run. Updated 3/23/13 Page 9

10 The Direct Service Cost and the Direct Expense amounts are deducted from the overhead pool. The remaining overhead is then allocated to each client (sales class or department) based on the percentage of total direct service cost posted. If clients are split between offices using the Report by GL Office option, the overhead is allocated based on that office assignment. See the sample below: ABC Children s Clothing 171 Hours Cost % Homestead Home Furnishings 58 Hours Cost % Marshall Motor Imports 148 Hours Cost % Total Cost: 19, Total Overhead: 50, Overhead Allocation: ABC Children s Clothing 20, Homestead Home Furnishings 8, Marshall Motors Imports 20, Total Cost: Total Cost = Direct Service Cost + Direct Expense + Overhead Allocation. The Total Cost figure (on the Group Total page) should be equal to the total overhead pool figure. The Overhead Backup Report displays the total overhead pool figure. Unbilled Time Cost (Optional): Cost amount of the unbilled employee time entered within the posting periods selected. Profit or Loss: Gross Income less Total Cost (plus Unbilled Time Cost if option is selected). Hours and Average Hourly Rate: Lists total hours posted within the posting periods selected. Gross Income is divided by the total hours to produce the average hourly rate. Updated 3/23/13 Page 10

11 Client Profit and Loss Report Formats Available include over 32 reports in the following categories: Detail Summary Period Comparisons Options include: Full Client Profitability with overhead allocation, without overhead allocation Gross Income reports Comparison to budget with FTE measurements Updated 3/23/13 Page 11