Hi there, I’m Nick Roberts, I am an accountant who has been working in public practice for the last 12 years.
I was an early adopter of Xero in 2007, and have been working with this platform (as well as other accounting systems since). I would like to use my expertise to help people with their use of Xero and other accounting software solutions.
For this blog post I am going to discuss some very important reasons for Tradesmen to use accounting software and additional software in your business.
So a couple of the biggest reasons you have gone into business is to make profit and have a comfortable life.
How does software help you with this?
It reduces the amount of time that you and your staff spend on administration tasks, thus increasing the amount of time that you spend on billable time.
Also in conjunction with a financial adviser such as myself, you can get real time information on your financial performance, which helps you make the right decisions.
Billable time and its Limits
The big thing to understand here is the amount of potential billable time that you and your staff have in a year.
There is 365 Days in a year
Less Weekends 104 Days a year
Less Public Holidays 11 Days a year
Less Annual Leave 20 days a year
Less Sick Leave 5 days a year
This Leaves 225 Days a year of billable time.
Assuming that everyone works 8 hours a day this leave you with 1,800 hours of billable time per year per employee.
So with no overtime or extra days worked, you and your employees can only work 1,800 hours a year, and one of the reasons you went into business is to be able to enjoy your free time, not spend it working all the time.
The idea is to maximize the number of hours that you and your staff spend on billable work and minimise the time that is spent on Admin Tasks.
How Does Software Help you Do this
A properly implemented package of software that has been tailored to your business, will reduce the amount of time that is spent on admin related tasks in your business.
Xero is the central piece of software to start minimising admin time in your business.
Xero on its on has the following time saving functions:
- Easy invoicing
- Fast bank reconciliation
- Mobile Apps
- Projects
- Expenses
- Payroll
In addition to Xero you can add additional apps to cater for your more specialist requirements which are interlinked via Xero.
These Apps can include but not limited to;
- Workflow Max (Job / Project Costing software)
- Fergus (Job / Project Costing Software especially for tradesmen)
- Ipayroll (Payroll Software)
- Spotlight reporting (Budgeting and enhanced financial reporting)
- Zero to Hero Dashboards (Financial Snapshots of your performance)
Example
Prior to Implementation of the software package your employees spend 20% of their time on administration tasks and you the business owner spend 40% of your time on administration tasks.
2 Employees at $70 an hour
1 Shareholder Employee at $100 an hour
1,800 hours less 20% equals 1,440 hours
1,800 hours less 40% equals 1,080 hours
Total Turnover
Employees: (($70 x 2)x 1,440) = $201,600
Shareholder Employee: (100x 1,080) = $108,000
Total $309,600
After implementing the software package your administration time is reduced to the following.
Employees spend 10% of their time on administration tasks
Shareholder Employee spends 20% of their time on administration time
2 Employees at $70 an hour
1 Shareholder Employee at $100 an hour
1,800 hours less 10% equals 1,620 hours
1,800 hours less 40% equals 1,440 hours
Total Turnover
Employees: (($70 x 2)x 1,620) = $226,800
Shareholder Employee: (100x 1,440) = $144,000
Total $370,800
By Halving the amount of time spent on administration tasks, the business in the example has increased its turnover by $61,200 a year, without working any additional hours or hiring new staff or increasing its charge out rates.
If you would like to discuss your options regarding the possibilities of reducing the administration time in your business please contact me.
Thank you for your time in reading this, if you have any questions or suggestions for future posts please contact me at nick@zero-tohero.com or on 022 405 9312.
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