Don’t trust your QuickBooks profitability, or don’t really understand it?
There is a solution.
You can integrate ConnectWise, Autotask, or any PSA with QuickBooks.
I have included a downloadable workbook that demonstrates what this looks like. For simplicity, it shows one month for a $2M MSP. Here is a link to a video walk-through of the Excel workbook.
The necessary inputs for integrated, high-quality reporting are:
- Payroll
- Detailed revenue
- Time entries from your PSA
In the workbook, there are tabs that represent each of these.
Once you have those inputs, you can compute payroll cost based on actual time entries and actual, accounting-grade profitability.
I know what you are about to say.
“My PSA already gives me agreement gross profit.”
The truth is that your PSA is giving you an approximation of gross profit. It uses forecasted rates and forecasted utilization to calculate a per-hour technician cost. That makes it closer to a budget than a report of actual results.
That is not acceptable when you are talking about the largest cost in your operation.
When you integrate your PSA with QuickBooks, as this workbook demonstrates, you start reporting on actual results. The bottom line of your gross profit reports ties directly to the gross profit on your accounting-grade QuickBooks P&L.
Once the above is in place, you get highly detailed profitability reporting anchored in reality. There are three tabs in this workbook that demonstrate just the beginning of what is possible.
Best of all, the reporting is anchored to what actually happened on your QuickBooks P&L, not an estimated per-hour technician calculation inside your PSA.
That allows you to clearly see things like:
- Managed Services profitability
- T&M profitability
- Project profitability
When you get this, you gain a new level of confidence in your decision making. Good reporting creates curiosity, and curiosity leads to better questions.
MSP Owner: How can I trust this?
Accountant: Because the technician payroll in this report ties back to the actual dollars that left your bank account.
MSP Owner: My PSA tracks customer type. Legacy customers, medical offices, regular customers. Can I see profitability broken down that way?
Accountant: Absolutely. And wow Jim, I have never seen you this engaged in a monthly financial meeting.
MSP Owner: I want to see the actual dollar amounts by technician in each line of business. Is that possible?
Accountant: What do you think, Jim?
When you finally start looking at your QuickBooks P&L through reports like these, you will actually begin to understand it and trust it.
And you will start giving yourself the tools necessary to achieve best-in-class profitability.
If you would like a personal walkthrough of the demo workbook, let us know.
