Client profit & loss (detail view) [in-depth guide]
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Shows profitability for a specific client with breakdowns by GL account or project type.
Overview
The client profit & loss report is designed to provide a date-driven, GL-based view of the profitability of each client. Much like the corporate P&L, the client P&L provides a look at revenue, COGs, AGI, expenses, and other expenses, but in this case, at the client level. The reports differ in that the client P&L provides a breakdown of labor costs based on time entered against specific services. In the corporate P&L, this would generally be a journal entry for the total value of your payroll.
How does it work
Revenue: Based upon all client invoices and journal entries posted within the selected date range and associated with the specified client. GL Account Type = Income
Cost of Goods: Based upon all vendor invoices posted within the selected date range and associated with the specified client. GL Account Type = COGS
AGI: calculation of Revenue - COGs
Inside Costs: based upon Vendor Invoices, Misc Cost and Labor Costs with transactions dates within the selected date range and associated with the specified client. GL Account Type = Expense
Other Income and Expenses: based upon vendor invoices and journal entries posted within the selected date range and associated with the specified client. GL Account Type = Other Income or Other Expense
Overhead allocation
Overhead pool
The overhead pool is considered all expenses, ie. journal entries and vendor invoices, targeting the GL account types: COGS, expense, and other expenses, that are not associated with a client, client project or associated an overhead client. Click here for further info.
Allocate overhead by
There are 4 methods of allocating overhead in Workamajig, The method selected will determine the percentage of the overhead pool to be allocated to the client:
- Labor Hours: Total approved hours entered against specified client projects / total approved hours entered for agency = Pct to allocate
NOTE: approved hours entered against overhead client projects are not included in the total approved hours entered for an agency. - Labor Cost: (Total approved hours entered against specified client projects * standard hourly cost from employee) / (total approved hours * standard hourly cost from employee) = Pct to allocate.
- Total Billing: Total revenue entered against specified client / total revenue for agency = Pct to allocate.
- None: Allocate no overhead.
Arriving at the amount of overhead to distribute
The initial calculation made above is to arrive at the percent of the overhead pool to allocate to the client. The value of this overhead is what the system is trying to match when it comes to allocating overhead. So the next calculation made is to subtract out labor cost, which comes from the hourly cost setup on the employee record, and misc cost, which is a way of accounting for things purchased in bulk and then distributed to the client/client project, such as photocopies, stock photos, etc. Giving the following calculation:
COGS overhead calculation: (COGS Allocation Pool * pct to allocate) = allocated amount of COGS overhead = COGS allocated
Expense overhead calculation: (expense allocation pool * pct to allocate) - labor cost - misc cost = allocated amount of expense overhead = overhead allocation
Other expense overhead calculation: (other expense allocation pool * pct to allocate) = allocated amount of other expense overhead = total inside cost allocated
NOTE - GL company considerations: If a specific GL company is NOT selected prior to running the client/project P&L reports, the overhead pool will consist of all overhead transactions from all GL companies. When you specify a GL company prior to running the reports, only overhead transactions for that specific GL company will be used to calculate the overhead pool amount.
Viewing the report
Select the filters prior to running the report
You can select a single date range, comparative, 1 year monthly, and budget comparison. NOTE: the budget comparison requires the setup of a financial budget for the client.
Examples: The following P&L examples are based upon revenue=$2500 and overhead = $1500
Overhead allocation detail report
Allocate overhead = none
Allocate overhead = labor cost
Calculation: This shows the percentage and also the expense overhead calculation
Pct to allocate= 72.72727273
COGS allocated: 500 (.727272727273) = $363.64
Overhead allocation (expenses) : 500(.727272727273)-1440 - 100= -1176.36
Other expense allocated: 500(.727272727273) = $363.64
Allocate overhead = labor
Calculation: This shows the percentage and also the expense overhead calculation
Pct to allocate= 70
COGS allocated: 500 (.70) = $350.00
Overhead allocation (expenses) : 500(.70)-1440 - 100= -$1190.00
Other expense allocated: 500(.70) = $350.00
Allocated by: billing
Calculation: This shows the percentage and also the expense overhead calculation
Pct to allocate= 71.42857143
COGS allocation: 500 (.7142857143) = $357.14
Overhead allocation (expenses) : 500(.7142857143)-1440 - 100= -$1182.86
Other expense allocated: 500(.7142857143) = $35.14
In each example, you can see that the inside labor cost used a loaded hourly rate that was overstated. This is why the overhead allocation (expenses) is a negative number, it is trying to calculate a number that will allocate the true expenses to the client.