Based on a webinar with Rechargly, Clarity Street and AccountKit, this blog covers how AU and NZ accounting practices can get a true picture of job and client profitability in XPM.
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How To Get A True Picture Of Job Profitability In XPM
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Most practices using XPM track time carefully. They know how long every job takes. What they often do not know is what every job actually costs.
Two things drive that gap. WIP that is not being cleared properly, and software costs that are paid by the firm every month but never attributed to the right job in XPM. Both produce a profitability number that is never quite right.
When time is tracked but software costs are not, a job that looks profitable on paper may not be. When WIP is cleared annually rather than monthly, write-offs accumulate quietly and work goes unbilled. In both cases, the practice is running on numbers that do not reflect reality.
At Rechargly, we recently hosted a live XPM best practice session with Amy Holdsworth from Clarity Street and Ben Barker from AccountKit, hosted by Alex Millar. This blog shares the key takeaways.
Step 1: Start with the WIP dashboard
Open the WIP dashboard in XPM and filter for completed jobs that still have WIP on them. You will probably find more than you expect.
A completed job with WIP is a red flag. The work is done, the job is closed, and the cost has never been recovered. Running this filter regularly is one of the fastest ways to find money sitting unbilled.
The longer unbilled WIP sits, the harder it is to recover. Clients move on. The write-off becomes easier than the conversation. Running the WIP dashboard filter monthly keeps the picture accurate and the conversations manageable.
Step 2: Clear WIP monthly
Think of your WIP balance as a business loan. If you owed that amount to a bank, would you be comfortable holding it?
WIP sits on the books for months without anyone asking that question. It ties up cashflow, hides inefficiency, and makes profitability hard to read accurately.
Clear WIP monthly. Bill as soon as work is complete. Never carry WIP into a new financial year. Firms that do this consistently get a clearer picture of profitability and much smoother cashflow.
Clearing monthly also keeps the numbers accurate while the work is still fresh. When WIP is reviewed regularly, billing conversations are straightforward because the work is recent and the client remembers it. When WIP accumulates, that window closes. The firm absorbs costs it should have recovered and the profitability number no longer reflects the work actually done.
