Seeing Job Margin Before You Invoice
Perspective · Finance & Operations · Finance Systems Team · 2026-10-16T09:00:00.000Z
When margins are known only at month end, leaks go unnoticed. Live job costing changes that.
Why month end is too late
When a job's margin is known only after the books close, the work is done and the money is gone. The same few leaks show up again and again:
- Unbilled extras. Extra work agreed on site that never reaches the invoice.
- Rework. Hours spent fixing mistakes that were never costed.
- Supplier price changes. Materials bought at a higher rate than the quote assumed.
- Overtime and subcontracting: added late to meet a date and missed in the budget.
- Freight and small expenses: low value each, but they add up across jobs.
What live job costing means
Live job costing shows the expected margin of every open job as costs arrive, not weeks later. The idea is one line:
Live margin = billable value − (actual cost + committed cost)
Actual cost is what has been posted: timesheets, goods received and expenses. Committed cost is what you have already promised to pay, such as purchase orders not yet billed. Including it stops a job from looking healthy simply because supplier bills are late.
example Illustrative example. A job is quoted at ₹5,00,000 with a budgeted cost of ₹3,50,000, a planned margin of 30%. Halfway through, costs already stand at ₹2,60,000 against a budget of ₹1,75,000 for that stage. If the trend continues, the job ends near ₹5,20,000 in cost and loses money. A month-end report would show this only after the work is finished.
Set it up in five steps
- Give every job a code and a budget at quote stage. Split the budget into labour, materials, subcontract and other costs.
- Capture costs where they happen. Timesheets, purchase orders, goods receipts and expense claims should all carry the job code.
- Show margin per job every day. Use simple colours: green on plan, amber slipping, red below the minimum margin you set.
- Review the red jobs weekly. Bring operations and finance into one 30-minute meeting and decide: reprice, change scope or fix the process.
- Invoice from the live record. Include approved scope changes so extras are billed while the customer still remembers agreeing to them.
Numbers worth watching
Do we need new software to start?
A spreadsheet can prove the idea on a handful of jobs. It breaks down when costs arrive from many people and places, which is when a system linking purchasing, timesheets and invoicing pays off.
What if supplier bills arrive late?
That is why committed costs matter. Count the purchase order now and replace it with the bill when it arrives.
Who owns the numbers?
Finance owns the method; the job manager owns the explanation when a job turns amber or red.