The Importance of KYC (Know Your Customer) Norms and Procedures in Banking
Follow the Money Trail In recent months, there has been a spate of disclosures around the world about how banks are compromising on customer identification procedures and are indulging in money laundering and other unsavory activities. From the US to India and the shadow banking system around the world including China, regulators have realized that […]
Variable Pay and Performance Linked Incentives
Variable Pay – Then and Now The practice of linking pay to performance has been around for a while. However, what’s new is that the percentage of pay that is linked to performance and the way in which the same is structured around different components of performance is new. We all know about the system […]
Workplace Politics – Meaning and Reasons for Office Politics
A setup where individuals from diverse backgrounds, different educational qualifications and varied interests come together to work towards a common goal is called an organization. (Also called workplace). An organization is nothing but an arrangement where individuals work together and join hands in achieving a common goal. The success and failure of an organization is […]
Stock Market Circuit Breakers
The job of a stock market is to provide relatively safe trading opportunities to its participants. Through this efficient process that allows rationing of capital amongst various industries, stock markets permit the economy as a whole to thrive. This is how stock markets are supposed to work in theory. However, in reality, their functioning can […]
Benefits of BPO to the Target Countries
In previous articles we have seen how the BPO phenomenon benefits the Western countries (US, Europe etc) by slashing the costs of the firms who outsource their back office work. In this article, we look at how the BPO phenomenon is transforming the economies of the countries that are the recipients of the outsourcing phenomenon. […]
The job begins with a quotation given to a client. For the client, all that matters in the quotation are the costs involved. However, for the contractor, quotation is almost a research document. Giving out quotations requires estimation. Contractors usually have fixed methodologies for estimating these costs. A study of past quotations can tell if the contractor has been making the estimations correctly or have they over or under priced certain jobs.
Sales order is document which signifies that the client has accepted the quotation. Work on a job can only be started only after the sales order has been received by the concerned department. Without the sales order, resources will not be allocated to this job.
A job cost sheet tracks the costs as and when they are incurred throughout the job. The costs are updated regularly as and when they are incurred. Out of these, labor and material costs are actual costs whereas overheads are estimates. The company may have to correct its estimates of overhead allocation later.
Material requisition forms help track where the material is being used. Since the material requisition form specifies the exact job for which material is being used, material costs can be accurately recorded. In the absence of material requisition form there will be immense confusion over which material was used for which job and what was the cost of that material.
Companies also keep a track of the freight charges that they have incurred for a specific job. Each freight ticket needs to be authorized with a job code and the costs must be added to the job cost sheet. In the absence of these tickets allocation of these costs will be a problem.
Labor tickets track the time that different laborers with different skill level have spent on the job. Based on this information, the labor cost can easily be allocated to different jobs.
Invoice is the document which signifies the completion of a job as requested by the client. When the invoice is accepted by the client, the contractor can consider the job complete. It is here that the contractors are legally allowed to recognize the revenues as well as the costs that were incurred in the job. Based on when the customer is paying, the cash account or the accounts receivable amount needs to be debited.
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