How to find where your highest margins are hiding

In the world of a service-based business, like any business, you have to know where the money is coming from. More than that, you have to know where the profits are coming from. After all, running a charity is not the intention, so why take on contracts for clients that are barely breaking even? Why work with clients that always end up costing more than they bring in revenues?

With project-based accounting, knowing where the money comes from and where the money goes can be done in real time. With a centralized time and billing system like Abak 360, you can charge all costs to the proper project or contract. You can also attribute all revenues to the relevant project. Once the data is there, figuring out where the margins are highest is kid’s play.IDEA-MAN-iStock_000017496132Large

When costs and revenues are associated with a project, a client, an account manager, a project manager, a business line, or even a partner, it becomes easy to analyze your business performance. For example:

  • Do margins differ significantly from one project manager to the next? What about account managers? Partners?
  • Is there a specific client type where margins are higher? What about project types?

With quality business performance data on project margins, our clients were able to identify where they were successful financially, and where they were not. The next questions would then relate to business strategy:

  • Are you willing to tolerate a lower margin on some projects, because they bring in other higher-margin project?
  • Are you willing to keep a low-margin client because of the visibility it brings to the business?

It is crucial to choose a strategy that allows the company to know all about the aspects of its revenues and losses. To do so, having a versatile software that standardizes processes, manages time and expenses and allows optimized invoicing as well as a sane budget and project management would consist of the ideal tool.

The name of this software? Abak 360.

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