When Manager has finished the Custom Control Accounts update (I know that some chart of accounts are done, but I believe not all), then I will be upgrading the program and organising my inventory into Inventory Sales - Computers, Inventory Sales - Laptops.
However, I noticed in the roadmap that there is a new feature coming -
Job costing
Currently, if you need to measure profitability by job, you can use Tracking codes concept. However tracking codes are more appropriate for divisions rather than short-lived jobs. New tab Jobs will allow you to create jobs and assign costs to them.
My understanding was that sub accounts and custom control accounts would be used to manage divisions and tracking codes was to manage profitability by job (which is one of the main reasons why inventory never had the ability to add the tracking codes to the account - I always had to add it manually on the invoice). However, this appears to have changed?
What I have done is created income groups such as
Backup Income
Installations Income
Inventory Sales Income
These are my income divisions using Sub Accounts.
I will then be breaking up Inventory Sales into Computer Sales, Laptop Sales, Whiteboard and Projector Sales etc using Custom Control Accounts so that I can monitor what sales of inventory are the most profitable.
I don’t really do projects like building a bathroom, so I don’t think that I need tracking codes in the future - I have only been using them as at the time Custom Control Accounts and Sub Accounts did not exist.
So how will tracking codes be used in the future, given that sub accounts and Custom Control Accounts should be able to break the income and expenses into divisions and eventually categorise the inventory sales into specific inventory sections.
Or would the tracking codes be used for company divisions such as the New York Brank and the LA Branch.
“Tracking codes” will be probably renamed to “Divisions”. The idea of division is to be able to produce profit & loss statement per division and then consolidated profit & loss statement for all divisions combined.
Jobs will work differently from divisions. When you create a job, it will be real account under new control account called Work in progress. So when consuming inventory items, they will be transferred from Inventory on hand to Work in progress. When you buy more material, it will be categorized to Work in progress etc.
The point is that Divisions and Job costing can be used side-by-side. If your company needs to measure profitability by individual jobs and if your company has also divisions so you want to know how each division is doing overall, you would use both features.
So basically its along the lines of New York Division and LA Division as it were or maybe IT Division and Newspaper Division. In other words for someone like me that just has one office location and just deals with IT, probably I don’t need Tracking Codes.
Your basic premise is correct - Divisions (tracking codes) would be best used where there are multi facets to a business, being the same operations at different locations or different operations at one location (factory & retail outlet).
Currently all activity within Manager is recorded as instant - an event occurs and its invoiced.
Job Costing will allow for situations where there is a lag between the activity and the opportunity to invoice but from a management perspective you need to keep recorded aspects of that activity.
Such a requirement could be in your operational area of “Installation Income”. Let say you won a job for an office fit out that required the purchase of equipment, use of sub-contractors and can only be invoiced at the completion of the commissioning which occurs over three months.
The equipment has been purchased and recorded as inventory and is then installed on site. This equipment is no longer inventory nor can it be invoiced so the Job Costing will allow the transfer of the equipment out of Inventory to a Work-in-Progress account - or if you like - a storage location for costs that relate to future invoicing.
Similarly with sub-contractor payments, you wouldn’t want those expenses to have a direct impact on your P&L without some compensating income, therefore you would store them in the Work-in-Progress account.
Then on invoicing the job those stored costs would be transferred to the P&L in conjuction with the income.
A more complex situation would be when a builder has several builds on the go and also receives progress payments based on a schedule rather then actual expenditure - but that’s another story