Cash, Measurements and Accountability Business Mentors.

Cash, Measurements and Accountability

Business Mentors

Measurements Role of objective measurements in management Growth without measurement Foundation

Measurement Tools JPP Accounting program Xactimate

Database Programs ACT Chronicle JPP Access

Accounting QuickBooks PSA Master Builder Timberline A-System MAS 90

Estimating Xactimate Blue book Boeck

Database program Purpose

Measure job status and progress Track sales and estimates Track marketing and link to jobs

Accounting Profit and Loss

WIP Accrual Standard chart of accounts Depreciation

Accounting Reports Balance Sheet

What you owe, what you own and capital investments

Key ratios Current Debt to Equity

Key Measurements Job Costing

By individual By job type In progress Completed

Sales By job type By individual Compare to goals

The King! Cash

Weekly cash projections A/R Reports weekly at least Measure turns and compare to goals Collect from a position of strength Manage and budget capital purchases Where do profits go?

Managing the Cash Crunch Start with a budget Short cuts and Let cash drive your plan Buy or sell to business weakness Equity partner Banking relationship Cash dance

Strategies for Speeding Cash Ask and Collecting from strength Types of jobs Have a cash plan for jobs and implement

All have some downside Close jobs Manage the schedule - Deposits and deductible

Billing and invoicing Profitability Subcontractors and materials

Banking Relationship Reality of cash in restoration

A/P and payroll - 30 days or less

A/R 40 days and over depending on the company

Banks Where is there money?

Understand your financials - esp Balance Sheet -the bankers do

Accurate and timely financials

Won’t lend $ when you need it Track record and consistency Relationship built on trust

Your Banker - Your Partner Educate on Business

Growth plan and strategy Vision Risks Margins and potential What you will do with the funds Difference from the construction industry

What do you want? Use your loan - dedicated funds

Not for capital purchase Operational cash

30 days revenue 80% of current receivables

Capital Expenses and Cash Stick to your budget Understand the ROI Rent Lease Bank Financing - not operating line

Accountability Subjective vs Objective Clear Expectations Be accountable for your communications

When, where and how do measurements take place

What to Measure Sales Invoicing Cash Customer service - every job Gross Profit Breakeven

Figuring Breakeven BE = overhead/GP Example

$100,000 overhead50% GP$200,000 sales

Sales Start with a goal - definition Individual Division and work type Include change orders and supplements

Review every week Sales meeting

Invoicing Focus on Revenue generation Complete jobs timely Measure weekly Leads to cash generation and profits

Quantifies production

Cash Weekly barometer Payroll, A/P Needs and targets Budgets and expectations

Customer Service Most important measurement in company

Start with training and strategy - Strategies for Success class

Post job survey Progress calls Visit jobs - Trust but verify Quantify measurements and celebrate success

Gross Profit Budget Measure in progress Accounting function Weekly in progress Monthly completed jobs Sort by estimator and job type

Improving Margins Travel Materials Shop time Poor project management Completion Not always the estimate

Accountability Clear expectations Frequent feedback

Formal Informal

Fair and consistent Based on Objective measurements

Employee Profiling

Where are you putting your effort?

Stars Shooting stars Falling stars

Accountability Tools Put resources toward opportunity rather than problems

Coaching for performance Be fair, timely and consistent Should not be a surprise

Putting it all Together Timely and accurate measurements Clear communications Accurate timely information Cannot growth without good reporting

Build your company around a good office manager

Know your baseline numbers Know the industry expectations

Tips for Success Make adjustments Get out of the trenches - use the talents of your team

Plan and communicate Requires objective measurements