Managing profitability throughout the project delivery life cycle is easier said than done. Of course, you should be estimating your profit margins as part of your initial bid. But far too often, real life throws a wrench in the works, and events happen during the execution that affect your best-laid plans. One of the biggest problems is missing items that should be billed for. Why leave profit you’ve earned on the table?
To counteract these issues, more and more organizations are incorporating enterprise resource planning (ERP) software into their business process. ERP software solutions give your business real-time visibility into all aspects of the project, from scoping to billing, so that you won’t be caught by surprise. Here’s how you can use ERP software to ensure that no billable item is left behind.
Immediate margin calculation
If you’ve ever put serious effort into a project, you’ll know that there’s always another data point to enter – edits to make, billable hours to record, and expenses to log. With every new piece of information, the status of the project changes, making it more difficult to understand what’s going on.
ERP software is not only able to accommodate this new information; you can also use it to immediately recalculate your profit margins on the project. You won’t have to wait for batch processing to take place, and you’ll have visibility into your profit margins at both the work-package level and project level.
Leveraging historical project actuals
As the old saying goes, those who don’t study history are doomed to repeat it. By analyzing your actual costs for projects in the past, you can work to continuously improve your profit margins with each new engagement. For example, you can review similar projects to understand where you lost or gained profit margin in each case.
With intelligent cloud ERP software, you can use versions and variances to understand the difference between your planned and actual costs. Based on these past actuals, you can revise your service offering template to deliver a higher-quality repeatable offering.
Automatic data capture
Although keeping track of all your billable hours and expenses is one of the most important activities during a project, manually recording them can be a recipe for disaster. Far too many employees swear that they’ll “do it later,” which both opens the door for errors and deprives you of useful information during the project.
Intelligent cloud ERP solutions remove these concerns by letting you automatically record all billable hours and expenses. The software can proactively prompt consultants at regular intervals to log their billable hours. What’s more, you can seamlessly capture your business expenses using an expense management system.
Preventing billing disputes
Although uncommon, billing disputes can present a major headache for your business to resolve. Many such issues are born out of the failure to create accurate records during the work on the project, leading to ambiguities and misunderstandings.
With intelligent cloud ERP software, your billing is as precise as possible to lower your chances of being caught in a dispute. You can create a billable invoice that reflects the work enumerated in your original bid and link it to the work that you’ve delivered to the client. Even better, you can bill the different project phases and deliverables independently using the appropriate billing type, whether it’s fixed, T&E, or periodic.
To find out more about how you can leave no billable item behind, check out our on-demand webinar on Delivering Client Value Profitably.