How can you increase your gross profit margin?
We have the answer for you:
Budgeting and tracking for each project’s cost in real-time
We used Xero software to help our client improve his gross profit margin on the projects by 5-10%.
We share with you how we did this.
What was wrong in the first place:
· The Contractor priced the projects using only estimates and old quotes.
· The project costs were not tracked.
· Project completion stages were valued based on on-site assessment only, and project costs were allocated as a percentage.
· The Contractor had no idea how much he spent on the project’s labour and materials.
When we finally calculated the true project costs, the gross profit margin was much lower than anticipated.
This is the answer to the question, “Why is my business not profitable if the projects are doing so well!?”
From the start, we focused on ensuring a precise allocation of all costs to individual projects and labour costs, which took a bit of work.
We designed formulas to calculate cost per labour hour, which included holiday, non-labour hours, Employer National Insurance and Pension Costs.
Implementing robust control measures helped our client track each project budget and monitor spending in real-time.
Additionally, Xero’s smooth invoicing system helped generate invoices swiftly and accurately, contributing to quick, error-free payments.
The outcome for our client was a remarkable transformation in improving gross profit margin.
Speak to Prevail Accountancy today, with 19 years of expertise within the construction industry, we can help your business grow.
Call us on 01706 550 825
or email email@example.com today!