Not sure what something means in CrewCost? Here you can find definitions and purposes of all the core concepts used in the application.
Understanding these concepts can help you to easily use CrewCost, as they form the foundation of the application's financial management capabilities.
If you have any questions, please contact our team at hello@crewcost.com.
Cost Codes
Cost codes are unique identifiers that categorize and track project expenses. Each cost code corresponds to a specific type of work or material, which helps organize and manage the project budget.
- Usage: In CrewCost, cost codes allocate expenses accurately, ensuring that each cost is assigned to the correct part of the project. This helps in analyzing budget adherence and financial performance.
Accounts Receivable
Accounts receivable refers to the money owed to a company by its clients for completed work or delivered goods. In CrewCost, managing accounts receivable involves tracking invoices, payments, and outstanding balances.
- Importance: Proper accounts receivable management ensures steady cash flow and financial stability. It involves timely invoicing, follow-up on payments, and accurate record-keeping.
Accounts Payable
Accounts payable represents the money a company owes to its vendors or subcontractors for services rendered or goods received. It includes bills, purchase orders, and other financial obligations.- Importance: Managing accounts payable is crucial for maintaining good vendor relationships and ensuring all project expenses are recorded and paid on time.
Job Costing
Job costing tracks all costs associated with a specific project or job. This includes labor, materials, subcontractor expenses, and overhead costs.
- Usage: CrewCost uses job costing to help contractors monitor project expenses against budgets, ensuring that each job remains profitable and within financial targets.
Profitability Analysis
Profitability analysis involves evaluating the financial performance of a project or the entire business to determine the profit generated.
- Usage: In CrewCost, profitability analysis tools allow contractors to assess the revenue generated from projects versus the costs incurred, helping to identify areas for improving profit margins.
Cash Flow Management
Cash flow management tracks cash inflows and outflows to ensure that a business can meet its financial obligations.
- Importance: Effective cash flow management in CrewCost helps contractors maintain liquidity, cover expenses, and avoid financial difficulties during project execution.
Dashboard concepts
- Cost of Goods Sold (COGS): The direct costs associated with producing the goods or services sold by your company.
- Revenue: The total income generated from your construction projects.
- Gross Profit Margins: The difference between revenue and COGS, showing the percentage of profit made before deducting overhead expenses.
- Overhead: The ongoing business expenses not directly tied to specific jobs, such as rent, utilities, and salaries.
- Net Profits: The actual profit after all expenses, including overhead, have been deducted.
Retainage in Construction Accounting
Retainage is a portion of the agreed-upon contract price withheld from payment until the work is substantially complete. This practice is common in construction to ensure that contractors fulfill all contractual obligations before receiving full payment.- Purpose: Retainage protects project owners by providing leverage to ensure that all work is completed to the required standards. For contractors, understanding retainage is crucial for managing cash flow and ensuring that they can cover expenses while waiting for final payment.
- Example: If a contractor is owed $100,000 for a project, a 10% retainage might be withheld, meaning they will receive $90,000 upfront, with the remaining $10,000 paid once the project is completed to the owner's satisfaction.
Bills
A bill is an invoice from a vendor or subcontractor requesting payment for goods or services. In CrewCost, bills can be associated with specific jobs, allowing for accurate tracking of project-specific expenses.
- Usage: Bills are typically recorded when received and are marked as paid once the payment is issued. Tracking bills accurately is essential for managing accounts payable and ensuring all project costs are accounted for.
Expenses
Expenses refer to costs that have already been incurred and paid. This might include credit card purchases for materials, petty cash expenses, or other out-of-pocket costs. If a project manager purchases $500 worth of materials using a company credit card, this would be recorded as an expense in CrewCost, as the payment has already been made.
- Difference from Bills: Unlike bills, which represent amounts owed but not paid, expenses are already settled costs. This distinction is essential for accurate financial reporting and budgeting.
What's next?
Keep exploring our platform by taking the next step: View the dashboard page.