Handling very detailed Job Types in the Chart of Accounts for P & L
Analysing job types using Billing Analysis instead of P&L breakdowns
NEOSYS can provide very detailed analysis by job type but it is not advisable to mirror this in the chart of accounts for P&L
In many cases in the past, especially where the finance system was a standalone package and was not integrated with billing modules, billing analysis reports were provided out of the financial module. It is tempting therefore to think that a detailed breakdown of job types should be shown in the P&L chart of accounts. However, fully integrated billing and finance software like NEOSYS now provide far superior billing analysis reports than can ever be provided by P&L breakdowns.
It is important to note that billing analysis obtained by P&L break-down does not even attempt to show margins nor does it show any analysis by client/supplier/market or any combinations thereof etc.
To summarise, proper billing analysis can be obtained without creating a detailed break-down of income and cost accounts in the P&L chart.
There are also problems with even attempting to get a very detailed break-down of job types in P&L chart as follows:
- You will end up with an unmanageable P&L chart of accounts as many rarely used and obsolete income accounts are added over time. Think in terms of years.
- It is duplicate work requiring creation of account for every new job type
- New job types cannot be created without involving finance department
- It is harder to see meaningful comparative figures between years
It is better to think of the job types as a dynamically changing view determined by operations whereas P&L accounts are a largely static view determined by financial considerations.
Given the above, the best policy is to freely put LOTS OF JOB TYPES in the Job Types File but only A FEW P&L ACCOUNTS in P&L chart of accounts. Many jobs types can be mapped to the same P&L account.