Costing Time Spent
Many moons ago, I was chatting with a business coach and he gave me some awesome advice.
He showed me what it looked like on a chart when jobs that had been confirmed had the shortest possible distance between acceptance and completion. He showed me what that did for business cash flow, and how it helped cost efficiency and also mitigated potential opportunity cost.
Let me elaborate
You’ve had a job confirm….. amazing! Effectively this begins the point in time where you can begin to charge for the work that you do. Within this charging you are also being paid back for the time to quote and the cost of sale within the markup in your invoices. Generally, you will be able to send the client an invoice with the deposit for the job which should cover off your P&Gs and any deposits you need to pay for materials and subcontractors…. But that is a blog for another day. Let’s call this day 1 of say, a 30-day job.
Generally, a 30-day job does not necessarily mean a job will be completed in 30 days, it is just the total of the hours and days needed to complete, but obviously other jobs may need to be completed concurrently. Example, you could have three thirty-day job on at a time, but all could be handed over on day 90 and it equates to the same thing.
However, there are some serious benefits in getting the jobs on the board knocked out as efficiently as you can.
A Few Things We’ve Learnt
The main one is risk, if you were to bill for all three thirty-day jobs on day 90, then you do have all your eggs in one basket. Any invoice could come back with disputes or questions, so the sooner it goes out, the sooner they can be dealt with so the cash hits your bank account.
Cash hitting your bank account consistently, rather than bigger lumps less consistently is the key to reducing stress around the monthly financial management of your company…. It takes more time and more stress to deal with managing creditors because you are short due to non-payment of a big invoice.
Time efficiency is where the big win comes in, the percentage of hours that can actually be billed out on jobs increases if there is less down time. If you actually counted up the available hours between all of those on your team who are billable onsite, and compared that number to the amount of hours actually billed each year, what would that percentage look like? Do the maths, you might be surprised!
This then leads into the opportunity…. You may well be able to complete two more jobs a year if you keep the time efficiency on jobs sharp. What might that do for your reputation? For your collection of margin or markup? For your bottom line at the end of the year? And how much is it costing you to not keep on top of this?