Are you clear where your profit comes from and if any of your customers are actually losing you money?

Loss making customers or even specific project or contract engagements are a drain every business can do without. Anecdotally, you may think you know but how much work does it take for you to be sure of the exact numbers?

Absolute divisional, customer, contract and project profitability is a challenge each business faces. Understanding the trends of this picture is even more important as you seek to optimise your business performance. Traditional accounting systems are very bad at delivering this information without an immense amount of work. Revenue by customer and cost by supplier should be straightforward reports, but without indexing all transactions by contract or project you will not be able to tie these two views together. The fully loaded costs of your staff time is even tougher to allocate at a project or contract level. It can be done, but it will take a massive effort and dedicated staffing to achieve this on a regular basis.

As service contracts migrate to All You Can Eat (AYCE) models, knowing what it takes to deliver these services is essential to pricing them correctly. Price too high and you lose the contract. Too low and you lose money. Accurate and automatic assessment of profitability is essential to tuning your business for growth.

What does Harmony do that is different?

Harmony not only automatically ties cost and revenue together on projects and contracts, it also costs each and every timesheet booking so that simply by using the software, multi-level profitability is being tracked automatically for you.

In addition Harmony’s journal engine ensures that both cost and revenue recognition are placed in the correct period so that your profitability is bootstrapped to your accounting periods, removing swings and providing vital profitability trends.

Project Profitability

    Why does this matter?

Good business decisions need to be based on fact. Being confident of your facts allows you to act decisively to address poor performing contracts or consider offering incentives to good customers who don’t over-consume your resources.

A world where you can directly address local financial performance weaknesses directly without concerns over data integrity

A world where customer price reviews can be handled without extensive manual pre-work

A world that Harmony creates

Clear period accounting is key

Harmony not only ties sales and purchases together on contracts and projects, it does so maintaining accurate period accounting through the automatic modelling of revenue and cost recognition. This means that the gross margin trend view is delivered directly without data cleaning being necessary.

In addition staff costs and expenses (billable or non-billable) are tied in each month to generate a contribution picture that if set-up correctly, provides a very close approximation to true profitability. The fact that this happens without any external analysis makes your access to accurate data continuous only a click or two away.

10 key features that ensure you always stay on top of your customer profitability

1. Comparison dashboard graph that provides instant access to your top and bottom ten performing customers, over different periods measured by revenue, margin or contribution

2. Single click from the dashboard takes you to a 12 month trend view of the customer with one-click drill down to transaction level or filter by project/contract

3. Automatic revenue and cost recognition driven by product

4. Full support for Work In Progress (WIP) accounting on projects including purchase cost recognition pre-calculation

5. Back-to-back supplier schedule matched to customer contracts ensuring cost alignment on recurring agreements

6. Project and contract related expenses allocated to profitability views on approval

7. All project and contract time bookings costed and indexed to profitability views below the line to deliver contribution analysis

8. Service tickets auto-mapped to contracts so time charged on ticket responses are costed directly to contract profitability

9. Pre-payment funds correctly accounted for in period driving revenue from time bookings not cashflows

10. Contractors (external labour) costed at supplier payment rates against projects or contracts on time approval

Eliminate manual effort and one-off analysis exercises through Harmony’s continuous contract and project profitability tracking logic

Customer, contract and project profitability requires the alignment of two key concepts: (1) accurate and complete period accounting at the contract level and: (2) indexing of supplier and staff costs against the contract/project. Attempting to achieve this in an accounting system is problematic due to the need to handle matrix accounting views. Even in the largest and most sophisticated enterprise accounting platforms, matrix views are tough due to the transient nature of project work, requiring transient sub-ledgers or complex allocations logic.

Harmony is required to manage these transient objects for billing purposes so leveraging this required complexity for profitability analysis saves time and increases accuracy. Accurate multi-level profitability is uniquely delivered by Harmony because its products are “period accounting aware” by nature ensuring the first criterion is met systemically.