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

Determining profitability of customers, contracts and projects is a challenge each business faces. However, it’s difficult and time-consuming to determine this information using traditional accounting systems, which require an immense amount of manual 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. Pirce too low and you lose money. Accurate and automatic assessment of profitability is essential to setting up your business for growth.

What does CloudBlue PSA do that is different?

CloudBlue PSA 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, CloudBlue’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.
CloudBlue PSA 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 the most profitable customers.

A solution that allows you to directly address local financial performance weaknesses directly without concerns over data integrity

A solution that makes it possible for you to handle customer price reviews without extensive manual pre-work

A solution delivered by CloudBlue

Clear period accounting is key

CloudBlue PSA not only ties sales and purchases together on contracts and projects, it does so by maintaining accurate period accounting through the automatic modeling 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 only a click or two away.

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CloudBlue PSA profitability screenshot

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. A 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 expensed 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 expensed directly to contract profitability

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

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

Eliminate manual effort and one-off analysis exercises through CloudBlue'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.

CloudBlue PSA 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 CloudBlue PSA because its products are “period accounting aware” by nature ensuring the first criterion is met systemically.