Session 4. Reports REPORTS. Session 4 focuses on:

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1 focuses on: a) Reports b) Tracking Service Work c) Department Reports d) Job Profitability e) Equipment Reports f) Customer Value REPORTS Obtaining accurate reports on time is the most important aspect of the management process. Good business managers surround themselves with qualified people, who are reliable and carry out their work with minimal supervision. The manager relies on reports to measure performance and assess the business growth. Success in each department of the business can only be accurately assessed with good reporting. Accurate reports that are delivered late are of little benefit. Also, reports that arrive on time, but are inaccurate, are of no use. It is paramount that the reports are accurate and be delivered on time. Often we find ourselves in a meeting of a sporting or social club and the treasurer s report is; I have not had time to complete the accounts, they will be ready for the next meeting. The correct action to be taken, is request the person resign from the position. Step aside and let someone who can do the job, take over. Business is exactly the same, if the person is unable to deliver the required reports on time, they must be replaced. Reports are critical to the success of a business. At all times, reports must be presented at the same time each month. In accounting, the format of a Profit and Loss Statement never changes, the same applies to a Balance Sheet. This allows the accountant, business owner and managers to compare performance at a glance. A report showing good results will motivate and encourage management. Reports provide a good indication the business is heading in a positive direction. A poor result, signals the management team to make changes quickly and rectify that which is causing the problem. An accurate report that is delivered thirty days late, could cause the business to be wound up. However, the same report delivered on time, will provide an opportunity for minor adjustments to be made. For example: A manufacture develops a fault of some type on the production line. The fault is not reported for twenty one days. The result may be, the recall of thousands of products. Had the fault been reported on time, it could have been fixed and saved the company money. There are many types of reports available to business owners and managers, which report the business will rely on, is a matter for the owner of the business. This text focuses on three categories of reports. Paul Funnell SWM Page 1 of 5

2 a) Tracking Service Work b) Bookkeeping / Accounts (Covered in session 5) c) Financial Forecasting (Covered in Session 6) TRACKING SERVICE WORK Tracking Jobs and Daily Work. a) The customer details b) Properties and their details c) Contact person for each job d) Who will be responsible for payment e) The job description and work to be performed f) The agreed time of arrival at the job site g) Which service technician has been allocated the job h) What is the status? In progress, Completed, Return This information is fast and efficient to obtain. Be sure to have the book in process ready when a customer calls. The response to a customer may make a difference in them giving the job to your business. Reports must be available at a moment s notice: i) How many jobs does a service technician have allocated? j) A customer is enquiring when their job will be completed k) Tracking of accounts, linked to a job l) What jobs are marked must return m) Recall the number of visits over a long period of time n) Advice given to the customer o) All information is on record, and producing such reports will not create additional work for staff. It is a case of setting up the system correctly in the first place and ensuring staff follow the methods and procedures. p) Reports are about quick recall of information, for management to make an informed decision. DEPARTMENT REPORTS In the case where a business is divided into departments, separate reports can be achieved to guage performance and profitability. It may be your service business is divided into sections for various types of work. Paul Funnell SWM Page 2 of 5

3 a) Commercial b) Domestic / residential c) Government d) Corporate companies e) Specialised areas Having departments can be very beneficial, particularly if it is simply selecting a department or ticking a box at the booking in stage. Not only can performance be measured in the percentage of work each department represents in the business, it also allows a report on profitability of each department. The presenter recalls having a good idea for his own business. However, the reports revealed it accounted for only 5% of the income and 25% of the expenses. Needless to say, it was cancelled quickly. There is little point is investing large sums of money into poor performing departments. The above example illustrates accurate reports delivered on time will save the company money. JOB PROFITABILITY Many business owners restrict themselves to knowing the overall performance of the business. This might be due to using accounting software that has been designed for the business Profit and Loss reports as well as the Balance Sheet reports. It shows the owner, if the business is trading at a profit or a loss. A successful business person will also focus on the profitability of each job (project in construction work). Knowing the gross profit of each job, and in turn each department will guide the management team in its decision making process. On the surface it seems easy to assume, where the materials and labour are priced at cost and charge to the customer with a 33% mark-up, the gross profit (GP) should be 12% (Based on, 33% - 21% overheads = 12% profit). The difficulty is, the cost of materials to be used prior to the mark-up being added may be taken from a standard electronic price book by one supplier. (This is done in the interest of time) The actual amount paid could be altered to reflect the true purchase price, thus altering the gross profit. Alternatively mistakes can occur and by watching the gross profit report, it will indicate if certain jobs for particular commercial customers are higher or lower than the average gross profit for that department. It is a good business practice to favour a customer where the gross profit is higher. Of course this could also be due to the performance, methods and systems of the service technician. Paul Funnell SWM Page 3 of 5

4 EQUIPMENT REPORTS There are benefits in being able to flag the equipment hired to perform work and the overall expenditure on such items of equipment. An indication of the optimum time to purchase the equipment for the business can be achieved. Where the business owns various items of machinery and equipment, it must be charged to the customer, similar to as if it had been hired and the hire charge is a direct cost. It is a good idea to have a hire department within the business and as machinery, equipment and tools are purchased, they can be hired to other companies for a profit. If such items are not charged to the customer, the business is giving away profits. The presenter recalls a plumbing contractor who kept track of the excavation hire costs over a two year period. The contractor used the reports to provide information to the bank manager supporting the loan application for the purchase of an excavator. CUSTOMER VALUE Often businesses are too busy working and getting the next job. There is a belief the bigger the advertisement the more jobs the business will gain. Maybe! Personally I have reservations. Producing a report for each customer that indicates the following is valuable: a) The number of jobs b) The average value of each job c) The total value in the current year d) The total value in the previous year e) The average value per annum This type of report provides the business owner / manager the opportunity to have a value rating on each customer. A customer who provides the business high volumes of work may be considered valuable that is if their work is profitable, which it may not be. EMPLOYEE PERFORMANCE REPORT Such reports should not be seen as checking on the employee. The report may be used as a legal alibi should the employee be accused of breaking the law. Such information would be considered beneficial. The report may be used to assist an employee in areas of their duties where they are not adequately performing. Of course, the main purpose of Employee Reports is to keep a record of where and when they carried out work, as evidence to the customer that the worker was in fact on their job. Paul Funnell SWM Page 4 of 5

5 An Employee Tracking Report must include: a) Job number and title b) Date of the work carried out c) Start and finish times d) Total hours An Employee Performance Report must include all of the above as well as the total chargeable hours for the week. This allows management to compare employees for best performance and assist those not gaining adequate chargeable hours. Tip: The employee s role is to make profit on each job. Sufficient profit must be made to cover those jobs considered to be difficult and may not be profitable. Management should consider the profitability on similar jobs by each of the employees. This allows management to allocate jobs to employees to which they are best suited. The presenter has no doubt that each business owner will require employee reports to be presented in many different formats. The good news is computer software can provided such reports, if the data is entered correctly. The fast and efficient way to do this is using Apple ipads, Android or Windows Tablets. The most important aspect of reporting that the presenter can provide is: a) Report on time b) Report accurately c) Management, take the time to interrupt the report d) Act on the information quickly End of Paul Funnell SWM Page 5 of 5