Costing and Billing Systems

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1. LHAP 301: Business structure, Costing and Billing SystemsPresentation by E. Kawahara

2. Business Structure

In order to understand how businesses using costing and billing systems, you ﬁrst have to understand how different businesses are structured. As we go through the next slide, get out a piece of paper, write down the role, and then who in your company does each role.

3. Roles within a Business:

Scheduler - ensures all people and assets are where they need to be and when

Bookkeeper - takes all the receipts and enters them into the software

Accounts Payable - pays bills Payroll - Collects crew hours and pays wages

Accounts Receivable - sends invoices and organizes incoming monies

Accountant - liaises with CRA on behalf of the company

Human Resources - in charge of hiring, ﬁring, reprimands, ROE

Reception - ﬁelds questions, deals with frontline calls and emails, often keeps everyone organized

Quoter - Prepares quotes and sends them to customers

Consultant - Meets with clients or contractors onsite to discuss jobsite parameters.

Foreman / Project Manager - Oversees the project, ensuring all assets are in the right place at the right time and the job is completed on schedule.

Crew - May include a crew lead if the foreman is running multiple jobs. These are the workers who implement the projects.

4. Business Types

Sole Proprietorship/Partnership (Usually Small Business)

❏ USUALL Y a smaller business (gross $70k/year or less)❏ Often referred to as “mom and pop”❏ Unlimited liability❏ Company debt is the owner’s debt❏ Company proﬁt is the owner’s proﬁt! (ﬁled with personal tax return)

❏ Owner often works with employees (usually a smaller number of employees)❏ Usually, to keep overhead low:❏ Systems are paper based or simple (Excel spreadsheets, Paper Timesheets)❏ Owner wears MANY hats

Rules around GST: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-bus inesses/when-register-charge.html Make sure you know them if you are moonlighting so that you don’t get caught owing GST on something you didn’t charge for…

5. Sole Proprietorship / Small Business

Owner’s Partner:Accounts in and out and BookkeepingPayroll SchedulingReception

Owner:Reception / ConsultingHR/QuotingProject Manager and Crew LeadPurchasing Employees/Crew - Doing the workIdeally has an apprentice or Journeyman who can run jobs with little oversight.

Subcontractors -Often many are needed to do speciﬁc work they are not equipped for:Irrigation, Tree Care, Spray, Machinery

❏ Often limited by how much the owner can do in an evening or weekend ❏ Relies heavily on having a good Crew lead/foreman ❏ May not have a strong cost control system because everything goes through the same person (not needed) ❏ Easy to drop balls.

In a small business, the Owner may be all of the bubbles at once! It’s a lot of jobs to keep straight.

The BEST part of this though, is the ability to manage your headaches… less employees, fewer customers, more freedom of schedule (maybe), and lower overhead CAN lead to greater profits.

6. Business types

Corporation (usually Medium sized)

❏ Financial/Legal separation between the owner and the corporation❏ Limited liability means that the company’s debt belongs to the company❏ Directors can be held liable for company debt. ❏ Shares are owned (usually these are private entities), usually by directors (who are also owners or owners partners, maybe employees). ❏ May be more separation between the Ofﬁce and the Field❏ Requires a higher level of communication❏ T o achieve this, usually systems are in place❏ Usually carries a higher overhead

Shareholding may be offered as an incentive - Pro: it helps with employee retention and investment.

Con: You really have to operate with clear boundaries on dividends, shareholders notes, slippery write-offs, etc. You also give up a percentage of your control, and OH will be affected by the need for SH meetings.

7. Medium Sized Business:

OFFICE ROLLS:Usually divided between 1 or 2 people

Accounts Payable &Payroll & HR admin

OwnerProject manager: Consults, Quotes, Schedules and PurchasesMaybe ForemanOfﬁce - HR face to face / Customer Service

Foreman - May Project ManageMay be Crew LeadManages job site tasks and assets

Subcontractors May not need as many now Bookkeeper

Accounts Receivable & Invoicing Reception

Crew - Does the workUsually seasonal / short term workers or 1 / 2 yr apprentices

Often you want some division in the Office for accountability purposes:

The person who makes up the invoices, pays the bills and receives the money shouldn’t be the same person once you have more than one owner - if you do, they can create false records and “cook the books”.

8. Business types

Large Corporation

❏ Likely has multiple shareholders, may be run by a board❏ Can be publicly traded❏ Municipalities❏ Large, well established construction company❏ Clear separation between the Ofﬁce and the Field❏ Requires highest level of communication❏ Utilizes complex systems❏ Carries much higher overhead ❏ May have various divisions

9. Large Business

Accounts Receivable

Quoter / Project Manager (purchaser) / Chief of Operations Foreman / Project ManagerJourneyman?

Chief Executive OfﬁcerManages all ofﬁces Shareholders / Directors / Board / T own Council

Crew Lead - Manages onsite operations3rd/4th year Apprentice

Subcontractors
Invoicing
Bookkeeper
Reception
Accounts Payable
Scheduler
HRPayroll
Crew 1st/2nd year ApprenticeSeasonal Help

In a small business, the Owner may be all of the bubbles at once! It’s a lot of jobs to keep straight.

10. Costing and Billing Systems

As companies grow and there is more and more separation between ofﬁce and ﬁeld, it is critical that companies have solid systems and that everyone uses them properly.

The REASON for systems/processes is to maximise communication and PROFIT! (or to avoid money hemorrhage)

11. Job Process

First contact○ phone call, a client interview or a quote request
Quote submission○ T o do this, typically the job requirements and tentative timeline are established.
Quote Acceptance and Contract○ Contracts will involve release of liability, timelines, procedural clauses, & payment terms.
Timeline establishment and Work Order Issuance
Project completion and tracking○ Tracking by foremen and workers
Invoicing● Payment!

Job processes change by scope and company, but this is the usual process

Procedural clauses - washroom utilization, animals, parking, work hours

12. Job Process

Small business

❏ Client Call❏ Quote provided❏ Client acceptance❏ Job completed❏ Documentation gathered❏ Invoice sent.

Commercial Example

❏ RFP (Request for Proposal)❏ T ender package sent out❏ Bid sent in❏ Approval is sent (work order)❏ Usually requires follow up information required❏ Includes dates❏ Includes invoicing info❏ Job completed❏ FAC (Final Acceptance Certiﬁcate) issued❏ Documentation gathered❏ Invoice sent in

There may be a warranty period in which there is a holdback.

Municipal Example

❏ Work orders received are added to standard tasks❏ Crews go out to do the work❏ Documentation is gathered❏ Costs are reported❏ And reported again❏ And reported again…

13. Job Process - Work Orders

Work Orders are used by different companies in different ways

❖External communication➢ Example - a Contractor lining up Subcontractors

❖May be used Internally in large municipalities or companies with many departments➢ Example - homeowner places a 311 call to the City. Operator generates a Work Order and sends it to the Landscape Division.➢ In this case, there often is no financial information included

They function as authorization for the receiver to proceed with work as directed without further communication.

14. Work orders contain:

❖Project information➢ Client name and address, PO designation, Contact number, one-time job? Repeat?➢ May include a customer and job ID (Ie ABC Projects is the customer and you work on 3 of their sites)

❖T erms of Service➢ Required completion date? Payment requirements? Requirements for subcontractor - WCB? Safety? Insurance? Minimum qualiﬁcations?

❖Job Description➢ Scope of Work information➢ T one directive - as with speciﬁcation writing.

❖Details➢ Any additional work to be completed?

❖Financial information➢ How much will the projected work cost?

❖Signatures➢ Who made up the work order & has it been received/accepted?

15. Sample Work Order:

❏ Issuing Company up top❏ Who is it going to?❏ Where is the work being done❏ Provide contact info❏ When does it need to be done by❏ What are the requirements for payment❏ What is the job scope❏ Money (external work order only)❏ Who made it❏ Who approves it

Additional comments may include a requirement for Contractor inspection at time of layout… Or substitutions only with Contractor/client approval…

16. Job Process - Purchase Order

❏ A buyer-generated document or number that is used for organization of purchase transactions.❏ They may be as simple as just the job name or address, or it could be a numerical set that corresponds with the quoting software❏ Your company may use POs in a number of ways:❏ Verbally given during purchase transactions ❏ Forms given or called in to suppliers who cannot release purchases without confirmation from the ‘office’❏ Write the PO on the receipts

Accounts Payable will not release funds unless there is a PO corresponding with the invoice.

This may be from your boss, to your supplier.

It might be from your General Contractor to your boss.

It is a management system whereby companies running various jobs can keep track of inventory coming in and assign expenses to the correct job.

It can be a number (large companies have a Scope of work Binder/document that the foreman uses including their PO number)... or a Job Name.

17. WHY do we need Purchase Orders?

❖When multiple jobs are running, it keeps the purchasing clear❖When the bookkeeper is external, they don’t know the schedule❖Accounts Payable often will NOT pay an invoice unless it has a PO.❖Without them, operating costs/overhead soar out of control and the company loses proﬁtability.

18. Tracking Systems

T o make it easier for Payroll and Accounting, as well as to aid communication, companies employ other systems as well…

19. Tracking Systems

Systems can be divided into

Financial tracking (Money in and out of the business)○ Invoicing - may be the same system, may be separate● Labour management○ Includes Time Sheets (and Connection to Financial system), Scheduling and Communication.● Other asset management○ Tracking tools, machinery, inventory.● Quoting○ May be linked to design software

20. Financial Tracking Software

❖Systems may be paper print outs by hand, or may include software as simple as Excel, Numbers, or Google Sheets❖ Larger companies use programs such as QuickBooks, or❖ Landscape Management Network (est. 2009)❖Invoicing and quoting is often built into the other software, or companies can use another program such as Paypal.❖Consider Manage360 (Dynascape integrated Landscape Management Program)

21. Labour Management Software

❖Landscape Management Network❖These programs can also include time sheets apps such as Quickbooks time, Jobber, When I Work, or ClockShark ❖Other companies may just have paper timesheets & a Shop Whiteboard calendar - but then someone has to take the time to interpret and ﬁle manually.

Field to Ofﬁce communication:

❖Other Useful Apps: LMN 4:00 4, WhatsApp, T exting❖Reporting paperwork at the ofﬁce

Jobber can also integrate into Quickbooks

22. Asset Management

❖Landscape Management Network❖Readychek as an option for a Canadian based pre-trip / logbook❖Spreadsheets for maintenance❖Paper reports for end of day asset management and assignment❖Assets most often overlooked are shop supplies or machinery used onsite

No matter what your company’s systems are, note the things that cost them money, learn their system and USE THEM EFFECTIVEL Y . It makes the company more proﬁtable and increases your value as an employee.

23. Assignment

Assignment:The customer you did your client interview with has approved your design, and you were able to upsell them to an irrigation system.You will be subcontracting this work out.Use the provided Work Order Form on moodle - see the assignment description for details you need to ﬁll this out. Adjust the template as you need to in order to get all of the information put in there.Ensure you check the rubric and have all applicable information included.Don’t forget to rename the document when you save and put your name in the ﬁlename before you hand it in! Also, please complete the course feedback form :)