Too many business owners fail to understand the value and importance of detailed business reports. The fact is that business reports improve productivity and revenue, reduce unnecessary expenses, and help you ensure compliance with all necessary regulation.
Without detailed reports, you do not know what is going on with your business at the deep level needed to monitor and improve. So, what reports should you be putting together?
Here are the most important business reports:
Labor Cost Distribution
A labor cost distribution report covers the basic costs of labor and staffing. The statement generally includes:
- Hours worked and wages earned by hourly employees
- Salaries paid to salaried employees
- Benefits accrued by employees (i.e., cost of health insurance, etc).
This report tells you how much you are spending on labor in detail, including on benefits. It can help you identify whether you have correct staffing levels and whether your benefits are cost effective. It can also help you determine if you are spending on unnecessary overtime.
Employee reports take this a step further. The reports cover more detailed factors of your employees’ time, including:
- Billable versus non-billable hours
- How much time is spent on specific tasks
- How much PTO employees are taking
- Employee utilization rates
Utilization rate is how much of an employee’s available time (typically 2080 for a year) is actually being used. It helps you establish how much downtime employees have and how much they are spending on specific projects. This can help you identify employees who are being underutilized (or overworked) and projects that are costing you more money than they are bringing in.
Realization is another employee report and is tied to revenue and billable time. Realization is calculated by taking the total billed hours divided by the total billable hours. This can help you establish how much somebody is actually bringing in revenue, and work out ways to increase realization and reduce time that is not covered by clients. Obviously this is more important for some business types than others, especially those businesses who are paid on a set project price.
Accounts receivable is, of course, the money that is coming in to your business. This report covers the basic financial numbers, and records:
- How much money has come in over a period of time
- How many invoices are due and what they amount to
- How many accounts are past due
- Total revenue to be collected
A/R reports help you identify clients who consistently pay late (or not at all), see how your cash flow has been over time and predict how it will be in the future. They can help you know which clients need to be contacted with a reminder about their bill (or even dropped), but also work out whether you have a cash flow problem in the future that will need to be addressed. Over time, you can work out revenue cycles where you may get more or less money and what causes it.
A project profitability report is designed to establish whether a specific project is going over budget or over time. It can be used for a variety of purposes, including establishing whether you are charging enough, dealing with client initiated scope creep, and looking for ways to trim back on costs and time.
Ideally you should set a profitability goal for each project, and past reports can help you establish a realistic goal. They will also tell you when you need to be raising your rates and can help determine how many hours a new project will take.
If you hire outside contractors, a contractor report can be used to determine whether you are paying too much by comparing the amount you pay the contractor versus how much you are able to bill out. Obviously, this does not apply to contracts which are for overhead or administrative purposes, such as office repairs. For any subcontracting of specific projects a contractor report is vital so you can assess profitability.
The contractor report can also help you determine if a contractor is inflating billable hours or initiating scope creep that might make a project become more expensive over time.
Expense reports are simple. They are the list of costs associated with a project. For example, if a project requires you to fly two people to Los Angeles, that cost would go on the project expense report. In some cases, the report can be used to generate a bill to the client if they have agreed to cover expenses. In other cases the report is used to help put together the project profitability report. Expense reports can also help you spot if an employee is spending unnecessarily or if a trip to a conference is generating more revenue than it is costing or not. They can be generated for a specific project, a period of time, or even a specific employee.
The temptation to do a single accounts payable and invoice report is high. However, you need to do a detailed invoice report that associates each invoice with a project task and/or a client. Invoice details also help you track things like sales tax you collected or paid. You can run both payable and receivable reports to help track expenses and receivables for certain projects. Reports can sort invoices by tasks, by client, etc. The report also tracks overpayments and prepayments, allowing them to be tracked to projects or dealt with appropriately.
All of these reports can and should be generated for specific periods so they can be used to compare trends over time, compare similar projects and establish what might be affecting your bottom line.
Business reports can easily be generated with Time Tracker Premium.
Our software allows you to generate all of these reports and either view them on your customizable dashboard or have them sent to the appropriate email at pre-set intervals. Try our 14-day free trial today (no credit card required!) to find out how Time Tracker Premium can help you understand the details of your business better and improve your productivity and bottom line.