Where is all the material going?

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Minuteman

Minuteman

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Where is all the material going?

I have not been in business all that long. Did the books myself, till I realized that I could not handle it. Now we have a full time office lady. She pointed out to me that we have been spending more on material than we have been making???

She ran the tickets so far this year, thinking that maybe one guy was side jobbing or something. Nope, it seems to be spread pretty evenly across the board. Huh?

About 3/4's of our work is T&M, so I don't get it. I have been marking up material 30%, but decided to bumped it to 50%, but I feel that is just addressing the symptom and not the problem.

Any suggestions?
 
Re: Where is all the material going?

Many things could be going on.
1. is theft from employees,small or large
2.your not billing the full cost,do not forget things like waste.
3.your men are not listing everything used.
4.your not up to date on material cost.
I work for a company that looks at every job sheet i turn in and will ask if they don't see things like screws,wire nuts,straps,tape,wire,etc showing up on ticket.Small but ad up.I list everything even doen to a drywall screw.You need to look hard because at T&M if your loosing them something is way wrong.
 
Re: Where is all the material going?

Originally posted by jimwalker:
Many things could be going on.
1. is theft from employees,small or large
2.your not billing the full cost,do not forget things like waste.
3.your men are not listing everything used.
4.your not up to date on material cost.
I work for a company that looks at every job sheet i turn in and will ask if they don't see things like screws,wire nuts,straps,tape,wire,etc showing up on ticket.Small but ad up.I list everything even doen to a drywall screw.You need to look hard because at T&M if your loosing them something is way wrong.
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My guess is it's probably 3 & 4.
#3 If your job tickets have 25 lines to list parts and you see a lot of tickets stopping at 25, you can bet they forgot to list 26-xx parts.
50% is a nice markup.
#4 Sometimes the suppliers will have a price increase and forget to tell you. Keep an eye on them.
 
Re: Where is all the material going?

I find myself checking cost prices on every invoice these days.
Wire, PVC, steel anything, etc, go up and down constantly. More up than down the past year+.
My main supply house guy is real good. He keeps me posted as to dramatic increases and when they are coming. This way I can stock up if I choose to.
For example. I bought a pallate (2800') of 2" sch40 20 footers a couple of months ago for an UG service. I got them earlier than I needed.
I think I paid .77/ft because my guy told me it was going UP! Within two weeks it was over $1.70.
Imagine if I didn't check the price and bought it at $1.70 but priced the job at $.77
 
Re: Where is all the material going?

I went on vacation for a week and told my guy to run around the corner to home depot and get whatever ya need and give me the invoices when I get back. He was very careful and very impressed at how much and what went into a small project. Romex connectors, grounding screws, tape, drywall screws, etc. started appearing on the invoices. It was a very beneficial vacation for both of us.
 
What about Truck stock / shop inventory ? I easily have $3000 worth of material on truck and about the same in stock room. At the prices of materials lately $6000 worth of stock don't get you much.

The first 6 months or so my material was almost double the income per month but was mainly because it was going into inventory/truck

We are paying about $6 per stick for EMT (3/4") and $60 per roll of 12-2 Romex for example
 
We have started using a PO system. The way it works is:

Each job gets a invoice form per day. The invoice number is the PO number. Go to the supply house more than once that day? Same PO. Office lady takes all charge invoices and adds them to one bill. Start another job that day? New invoice = new PO.

Each truck has a number. Need a part for "stock"? Add 3 zeros to the truck number and you have "stock" PO number.

Office lady says that her book keeping software can track each trucks stock. Buy 10 devices on a invoice PO and sell 7? The truck has 3 devices in stock. Sell one of the 3? Put it on the invoice and it will be deducted.

Our favorite supply house has a easy to follow number system & catalog. Invoice is for a "charge" customer? Just record number and quantity. Cash customer? Look up the price in the catalog or receipt and mark up.

We already had in place a petty cash system. Each man is "issued" $100 at hire. Go to one of the Big Box Stores, bring back a recite. When you receipts total almost $100 or more, reimbursement. Separate employment, you owe $100 bucks in cash or receipts.

That's about it. Working on a incentives plan.
 
Don't like the petty cash idea for many reasons. We issue a credit card for the big box stores. At checkout the cashier asks what is the PO or Job name. (Cost Control)
Everytime a part is ordered/bought at the electrical supplier a POP/Job number is used. Our system has been in use for over 20 yrs. I have heard from my salesmen that other ECs are using spinoffs of our system.

The biggest downfall is truck stock. A box (10) of receptacles is taken from warehouse and put on truck. 8 are used on the job, so the other 2 are left on the truck for later. Unfortunately some of the trucks are disorganized (another thread, another time) and the 2 recepts are on the floor and get boogered up. They are now throw away.

(Mike if you want details on our system PM me. Tim)
 
Thanks Tim, I will PM you.

Our company is still young and evolving. The petty cash thing was the best system at the time, but we could go to credit cards now. Either way, there is accountability.
 
When it comes to material mark-up, take care to include everything, when i started out i used 50% across the board figuring that was eniough, and ran into the problem, your having, and it was the accountant that found it, what i din't consider, was how fast that 50% can drop, first take your sales tax off of the 50%, and remember you were taxed on 100%, so now we no longer have 50%, then the accountant said, we need to deduct the inventory or shelf cost, about 7% on each item, then there is the billing out cost which is anywhere from 3 to 5%, and none of this takes into consideration, price increases, or time spent handling or stocking the material.
What we learned from this was 50% is more like a break even mark-up, and that, we may be good at wiring, but not too swift at accounting, so since then, we are more carefull to mark-up for profit, it may take a few months to get back on track, and recover your losses.
 
hi all first post here i'm a sparky in the uk and thought i'd but in :) minuteman i've just started using ths software not sure if you've seen it but it seems quite good and its open source(free)
http://www.turbocash-usa.com/
i naturaly use the UK version :D
i know nothing about accounting so its taking a bit of getting my head around ,you can controll all your stock ,clients and do all your tax etc ,just thought i'd point it out to you
BTW i have nothing to do with it so have no reason to push it unless i thought it was useful and i like free!
davy
 
davyn1 said:
hi all first post here i'm a sparky in the uk
Click to expand...

Davy, nice to meet you. I will take a peek at the link and let you know what I think. :D

(I have got to stop reading Dr. Seuss to my Grandson, I think the Cat in the Hat is starting to effect me.)
 
Minuteman thank you and nice to be here:)
only problem i've got is i dont understand most of your terminology ie ,roughing in(first fix),your cable size?,change out(renew old for new)
my idea of what you mean in brackets,
would like to know if this site would help me as we seem to be completely different systems,i'm not considering moving i'm just curious,must be getting old

http://hyperphysics.phy-astr.gsu.edu/hbase/hframe.html

any other links to better sites would be gratefuly received
also tried downloading a copy of your NEC but no success
cheers
davy
 
Well Davey, The problem is, you guys in the UK don't understand English!

I know the NEC has used metric / inch on all measurements and conduit sizes for a few code cycles (New cycle every 3 years) Larger wire is measured in circular mills, but our smaller gauges are in AWG (American Wire Gauge) and I don't know of a conversion.

There will be a couple of guys by here soon who will have an answer - they live for it!

I have owned a Jaguar, it had a glossary of British to American terms. I think an American to British electrical terminology translator would be a humorous read.

I don't believe that you will be able to get a downloaded current copy of the NEC. They like the $50 american dollors to much.
 
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