Tracking Profit and Loss Effectively for Business Projects
2023 Update: Click here to access our new article: How to Keep Track of Profit and Loss
Keeping on top of profit and loss for project expenditure is essential. Throughout a project’s lifecycle it is extremely important to always keep track of all the numbers. It is these valuable numbers that will determine whether the project was viable or not. It is easy to look back at a failed project and figure out where it went wrong, but the real aim is to spot issues before they become detrimental to the project.
So how can you manage your profit and loss effectively?
When recording how much is being spent on a project it is important to have real-time tracking. That is why you should consider implementing an online cloud based system that is easily accessible and gives you an overall picture of your project expenditure when and where you need it.
This visibility and accessibility will ensure that if any issues do arise within your expenditure, they can be spotted straightaway and corrective action can be taken before it hinders your profit margins. Real-time tracking means that you can also see where you are with your spending relative to where you should be.
When a project is set up it is rarely with just an end goal. Milestones are set along the way to help identify if the project is staying on path. Having software that is always up to date with your latest figures, but also allows for easy reporting at any stage, can be vital to ensuring you know if your milestones are being hit.
Projects are not always associated to one department alone; they can be spread over many. Having to use common spreadsheets across lots of departments can be detrimental; not only can it create a lot of confusion and errors through file sharing, but it is not always an efficient use of time. In order to bring a successful project into fruition, it is essential that you use a system that tracks departmental spending against the project. You can keep an eagle eye on what departments are spending the most money, and track the type of expenses they are claiming for. This makes cross-collaboration between different departments effortless.
What becomes quickly apparent with business projects is that there are countless ‘small’ expenditures that are not always accounted for when planning the initial budget. It is these expenses that can sometimes make projects become un-stuck. While it can be easy to think about the big spends for your business project, little costs that add up over time are often forgotten about. For example, many project expenditures will budget for employee time, resources, materials etc. However, they can often overlook small expenses such as train journeys to meet clients, business lunches etc. not to mention anything that may crop up unexpectedly. As these little spends can add up considerably, it is therefore imperative to have a system that can track these effectively.
Expenses are unfortunately often over claimed, whether intentionally or accidentally. Having a robust set of approvers can help to bring these unnecessary costs down. Software that allows you to create approval flows for project expenses can really help to keep your budget in check.
Software like ExpenseIn provides an accessible platform that allows your employees to see updates in real-time. Powerful reporting tools enable you to make sense of your project’s raw data and approval flows help you to keep spending where it should be. Next time you are implementing a project try ExpenseIn’s projects feature and see the difference it makes to your results.