It takes a multitude of accounting functions to run a small business, from accounts receivable and accounts payable to managing credit card accounts, income statements and balance sheets. Unless you have an accounting background or just happen to love crunching numbers, it’s easy to become overwhelmed.
When you don’t have a bookkeeping system you can easily manage, you end up with a time-consuming process that costs more to maintain and has greater potential for human error. People in this position often turn to QuickBooks and similar programs, in conjunction with their field service management software, to help with their accounting needs. They may have prior experience with these and hesitate to “fix” something they don’t see as broken.
While QuickBooks can help home service contractors manage their finances, it doesn’t position them to grow and increase profitability like a fully integrated, all-in-one solution can. Once you are able to run your operational and job data on the same platform as your financial reports, you will achieve a new understanding of your business and areas that are ripe for growth.
There are a few categories you’ll want to pay attention to when considering the right field service management system with built-in accounting for you and your team.
Defer agreement revenue to the proper period
Having a deferred revenue account is extremely helpful when managing accounting for agreement visits. If all agreement revenue is set up to go into that account when you sell an agreement, it will sit until you perform the visit. Then you will realize the income in the period the work was complete. If you have an agreement that is expiring, you can recognize the revenue at the end of the period. Your software should be able to alert you that it is expiring so you can make the necessary adjustments before year’s end or before it expires.
Similarly, a warranty reserve account will allow you to defer money for future warranty expenses and pull funds when a warranty repair is completed. When this is tracked in the general ledger, it’s easy to pull reports for an audit. A program like QuickBooks requires journal entries to defer warranty funds and takes constant monitoring to know when a warranty job is complete and when journal entries are required.
Automate sale and expense type
It’s important to be able to easily track your expenses and sales when you do your financial reporting. With many accounting software systems, you have to select the sale type, expense type, and general ledger account when the data is entered. Multiply this by the many parts in your pricebook and multiple jobs per day, and it’s easy to see how a significant amount of time can be eaten up making general ledger and sale/expense-type decisions. Not to mention, you need someone with bookkeeping experience to do this since the general ledger decisions are so important.
When you use a field service management platform with accounting built in, you can complete a set-up process one time and choose a sale and/or expense type and department for all your items, parts, labor, etc. After that, it automatically assigns at the time of sale, freeing you and members of your team to work on growing your business rather than spending extra effort on unnecessary data entry.
Rather than needing a bookkeeper, you can opt for a less expensive data entry specialist. To make it even easier, look for software that is prepopulated with sale and expense types and general ledger accounts based on your business type and needs, with the option to customize if needed.
And when all expense and sale types are coded to a department, it’s easy to run Profit & Loss statements per department to see where you can increase your profit margins. QuickBooks can code departments by class and may not capture everything in your P&L statement.
Reduce the effort to balance accounts
Look for software that offers a reconciliation utility feature so that you do not have to manually search for your out-of-balance accounts. This will help you easily find the date when your accounts went out of balance versus manually searching through countless transactions and entries.
Other benefits of integrated accounting software
There are a few other reasons that field service management software with accounting built in will make it easier for a non-accountant to manage this part of their business:
- Save money by no longer having to pay for accounting software from a third party
- Enjoy instant access to all your information, rather than waiting for your accountant or outside party to compile the information you need
- Avoid double data entry and reduce potential for human error by eliminating the need to enter separate information into multiple programs such as bookkeeping software and dispatching software
- Syncing issues will be a thing of the past once all of your company’s service history data is stored right alongside your financial transactions and records
Even non-accountants will find that the right accounting software integrated into their business management software can make their critical business processes more efficient and effective than ever. That’s a numbers game worth playing.
About the Author
Nikole Smith is director of product management at Successware and has more than 20 years in the software and technology space. For more information about Successware's software solutions for home service contractors, visit successware.com.
