Blueprint for Success: Chapter 4, Integrated Accounting

A system that links everything from lead creation to financial reporting is a must-have management tool.

April 30, 2001


George Harrop (right), chief financial officer, and Joe Divel (left), director of recruitment, of Case Design’s Handyman Services.

Photos: Christopher Walle Photography


You have an accounting system in place, and it’s getting the job done. But to keep pace with industry leaders, you need to go a step further. Remodelers on the cutting edge are using integrated accounting systems that capture financial data and allow them to use the information to bolster their businesses.

An integrated accounting program allows for data entered at one point to be reflected during other events in the process. For example, data entered when a prospect calls with a lead is continued through contract preparation and billing. Ultimately, it is utilized in strategic planning decisions based upon information derived from financial reports.

The goal of an integrated accounting program should be to assist the owner in generating net profits of 10 percent. To do so, the estimating component that linked to the accounting program should generate estimates that will yield gross profits of 45 percent to 50 percent.

Thanks to software that allows different packages to “speak” to each other, it is now possible to generate reports based upon data collected or housed in word processing, accounting and lead tracking software. In order for a company to benefit and grow from the information it generates, the linked components of an integrated system should include the capability to perform at least all of the following functions.


Case Complete

Case Design, Bathesda, Md., a company that has received extensive exposure for its innovative business solutions, uses an integrated accounting system.

The integrated software package used by Case Design’s Case Handyman Services division is designed to make its franchisees more efficient, according to George Harrop, chief financial officer.

The package is composed of three components: Case Client Tracking Systems, Case Job Estimating System and QuickBooks. It assists franchise owners in generating remodeling projects that result in a 50 percent gross profit percentage.

Franchisees are taught how to input data into the integrated program so the reports that are generated can be relied upon for sound decision-making.

Lead Tracking and Client Management

A call to the office should result in the preparation of a new file including such information as client name, address, referral information, type of project and budget. That information should generate a letter to the individual who referred the lead as well as an appointment for a salesperson to visit the prospect. In turn, the appointment should be sent to the salesperson’s electronic calendar.

Lead tracking reports should enable company management to calculate the source of new business and even the profitability of projects by lead source. This should assist in evaluating marketing programs and help allocate future advertising dollars.

The Sales Call

Armed with a laptop, a salesperson should be able to generate an estimate in the field for all small and most midsize remodeling projects. While certain materials may require specifications and delay a final estimate, the salesperson should be able to present the field estimate to a customer with a fairly high degree of confidence.

For simple projects, if the client agrees to the estimate at the initial sales call, the contract should be completed on-site and then printed via portable computer. Tied into the program should be a payment schedule, resulting in the customer’s writing a check for approximately one-third of the contract price at the time the contract is signed.

Estimates for more complicated projects can be completed at the office, with the contract and its resulting first invoice being sent by mail or e-mail.


Once an estimate is completed and the contract signed, the integrated system should schedule the work. (This entails a transfer of information to the production department.) Scheduling should include the start date as well as the expected length of time to complete the project.

Depending upon the type of job to be performed, the scheduling program should also generate work orders to subcontractors and material orders to vendors. Pertinent information should be transferred that would allow suppliers to have materials shipped in conjunction with the production schedule. In addition, subcontractors should be scheduled as needed. (Both material suppliers and subcontractors should also respond electronically so the production department receives appropriate acknowledgment of their responses.)


Add-ons Required

One of the more critical components to the accounting system developed by Case is the use of add-ons. Add-ons are charges that are added to an estimate to increase the probability of achieving a 50 percent gross profit ratio. For example, any remodeling job with an estimated completion period of two to five days will have 21/2 hours added on to the estimate.

Why? Case has determined that is the number of hours that will be consumed in miscellaneous tasks not otherwise spelled out in its estimating program. While an estimator has the ability to turn the add-ons component of the estimating program off, failing to include those hours may doom the project to below its target gross profit percentage. If that were the case, the Labor Item Detail and Estimated vs. Actual Expenditures reports would probably reveal that to the franchise owner. As Case has learned, more important than making a sale is producing a job with sufficient profitability to allow a company to thrive into the future.


Before production begins, the invoice for the second payment should be generated. (Clients with on-line banking should be encouraged to transfer payments electronically to help company cash flow.) Similarly, as certain phases of production are completed and entered under the job-tracking component, future invoices should also be produced. Invoice reports should detail open invoices by age and customer to allow for a more timely collection of receivables by the bookkeeper.


After labor, materials, subcontractors and other fees are posted to specific jobs, the accounting system should generate employee payroll checks. Not only does this eliminate the need for a payroll service, it allows for timely submission of local, state and federal tax reporting and payments.


When data is entered regarding material expenditures and subcontractors by project, the accounting software should generate checks to pay for those services in a timely fashion. In fact, more advanced systems could electronically transfer funds for all payables.

Commissions and Performance

Commission reports for a sales force can be easily generated by an integrated accounting program. Even more important for management, however, is the fact that salespeople can be identified who generate the most and least profitable jobs. Thus, more successful salespeople can be appropriately rewarded for their work, and salespeople who are selling jobs that are being underestimated can be retrained to generate more profitable work.

Job Tracking

An accrual accounting system demands percentage of completion reporting, and an integrated system should perform that function. Aside from its accounting function, the report should assist a production manager in scheduling and highlight problematic jobs so they can be corrected before gross profits are affected.

Job Costing

Perhaps the most critical reports fall under the heading of job costs. More successful remodeling companies quickly learn the niches that make them more profitable, and those lessons are learned from analyzing financial information from completed jobs.

Analyzing data removes emotion from the decision-making process. For example, a remodeling company specializing in interior remodeling should emphasize those jobs that are its most profitable. Less profitable jobs should be handled by subcontractors, or better production systems need to be put into place to make them more profitable.


Super Software

The QuickBooks Pro software program is an integral part of the Case accounting package. This particular software, however, can be purchased as a stand-alone and is uniquely suited for many small businesses, including remodeling companies. It can provide customizable reporting for business checking, accounts receivable, accounts payable, invoicing, payroll services, inventory, purchase orders, job costing, time tracking and online bill paying. In addition, the software integrates with such Windows-based programs as Word, Excel and Outlook. QuickBooks Pro is available from the store.

Financial Reports

Strategic planning should be based upon the financial information generated from completed jobs. Assimilate the information into the following reports:





  • Profit & Loss: Scrutinizing profit-and-loss statements assists in determining whether the company is profitable. While there are times when deficit spending is justifiable, profitability is still a key determinant for quantifying whether all the efforts from marketing, production and sales are successful.





  • Budgeting: Companies with a sound business plan know how much they will spend before they spend it. Budgeting for future years and then comparing actual spending with those budgets is a sound method to determine future capital needs as well as your capability to plan accurately.





  • Cash Flow: The expression “the operation was a success but the patient died” is directly related to cash flow. It is possible for a remodeling company to go out of business if it runs out of money even though it appears profitable on paper. Cash-flow projections are critical to both short- and long-term success, and should assist management in arranging for credit from its primary lending source.

    Remodelers must adapt or face increased competition from more savvy companies. In the end, those companies best able to coordinate all phases of their business will profit.PR

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