How Do You Departmentalize Labor?

A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.

Contractor Question:

“As we continue working towards departmentalizing our Income Statement (beginning with Cost of Sales of course), I am having a hard time figuring out departmentalizing the labor. Our service technicians tend to switch back and forth between working at HVAC Service, Maintenance, and sometimes even Install types of jobs.”

Contractor University Expert Response:

“Yes, most companies will have field teams working across multiple market segments, just as you mentioned.

That’s why it’s important to use department codes and activity codes in accounting to track where the work was done. In QuickBooks Online, for example, this is done with “classes”—it’s the same idea: code the department so time and costs are properly allocated. It’s straightforward from an accounting standpoint—just numbers tied to the chart of accounts.

The real challenge isn’t the accounting setup, it’s behavioral—getting field teams trained to actually enter the right information consistently.

If your current software doesn’t allow for this kind of coding, then the solution is clear: move to a platform that does, like QuickBooks Online or Sage integrated with a CRM.”

Contractor University members can click here to log in to their member dashboard and submit a question through the Ask the Expert portal.

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