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Cash, Measurements and Accountability

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

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Cash, Measurements and Accountability

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  1. Cash, Measurements and Accountability Business Mentors

  2. Measurements • Role of objective measurements in management • Growth without measurement • Foundation • Measurement Tools • JPP • Accounting program • Xactimate

  3. Database Programs • ACT • Chronicle • JPP • Access

  4. Accounting • QuickBooks • PSA • Master Builder • Timberline • A-System • MAS 90

  5. Estimating • Xactimate • Blue book • Boeck

  6. Database program • Purpose • Measure job status and progress • Track sales and estimates • Track marketing and link to jobs

  7. Accounting • Profit and Loss • WIP • Accrual • Standard chart of accounts • Depreciation

  8. Accounting Reports • Balance Sheet • What you owe, what you own and capital investments • Key ratios • Current • Debt to Equity

  9. Key Measurements • Job Costing • By individual • By job type • In progress • Completed • Sales • By job type • By individual • Compare to goals

  10. 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?

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. What do you want? • Use your loan - dedicated funds • Not for capital purchase • Operational cash • 30 days revenue • 80% of current receivables

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

  18. Accountability • Subjective vs Objective • Clear Expectations • Be accountable for your communications • When, where and how do measurements take place

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

  20. Figuring Breakeven • BE = overhead/GP • Example $100,000 overhead 50% GP $200,000 sales

  21. Sales • Start with a goal - definition • Individual • Division and work type • Include change orders and supplements • Review every week • Sales meeting

  22. Invoicing • Focus on Revenue generation • Complete jobs timely • Measure weekly • Leads to cash generation and profits • Quantifies production

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

  24. 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

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

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

  27. Accountability • Clear expectations • Frequent feedback • Formal • Informal • Fair and consistent • Based on Objective measurements

  28. Employee Profiling Where are you putting your effort? • Stars • Shooting stars • Falling stars

  29. Accountability Tools • Put resources toward opportunity rather than problems • Coaching for performance • Be fair, timely and consistent • Should not be a surprise

  30. 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

  31. Tips for Success • Make adjustments • Get out of the trenches - use the talents of your team • Plan and communicate • Requires objective measurements

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