Trades Industry

Every accountancy and bookkeeping firm normally has some tradie clients. Over the years we have talked to many Tradies and asked them how are they determine the charge out rates that they apply for the various categories of team members that they engage.

You could ask your tradie clients exactly the same question and I would be very surprised if you got a different answer from them to the ones that I got which were basically – “we look around and see what other people are charging or we take last year’s charge out rate and add a bit more to it”.

I have enquired as to what productivity percentage they are budgeting to achieve from the various team members and again I don’t get a strong response that they are utilising the concept of individual productivity percentages in the determination of charge out rates.

However, when we have discussed the concept utilised by ESS BIZTOOLS with Tradies, we get a strong response because they understand the rationale behind the various calculations to determine charge out rates that are calculated in an attempt to ensure that the Tradies desired profit is achieved.

“The Tradies Charge Out Rate Calculator” gives an individual trades business operator a set of charge out rates that applies to the dynamics of his/her business in terms of individual team member productivity, wages and salaries being paid, working hours, individual productivity percentage overhead expenses of the business, markup on external purchases for clients and the targeted profit for the year.

This is the type of analysis that all SMEs need to receive from their Accountants so that have a set roadmap for the financial year to guide them for a range of key items including:

Labour on costs for various categories of team members
Analysis of their team relating to gross salary, hours been paid for, budgeted leave, individual productivity percentage, chargeable hour per team member
Budgeted overhead expenses for the year
Estimated purchases to be made on behalf of clients
Mark-up percentage to be applied to purchases for clients
Targeted profit for the year

The ESS BIZTOOLS Tradies Charge Out Rate Calculator will calculate the individual charge out rates and the budgeted chargeable hours per team member required to earn the targeted profit for the year.

Our members who have successfully introduced this system to their tradie clients have introduced the concept of the preparation of Monthly Financial Accounts and the analysis of Key Performance Indicators to monitor whether productivity percentages in line with the budget estimates are being achieved and if not enquiries can be made and if the productivity percentages are found to be unreasonable adjustments can be made so that the correction is made as soon as possible in the financial year

This is real accounting services to assist your Tradie Clients to run successful businesses and to achieve their profitability targets.