Penny Wise & Dollar Foolish Over QuickBooks 3rd Party Apps

Are you being penny wise and dollar foolish over QuickBooks 3rd party apps and their price? Don’t be ashamed, it happens to a lot of people.

Many times a QuickBooks user will look at the cost of a 3rd party application and think – why should I spend the money on a third party application when I can just as easily do this task using Excel or some other way!  This is insane, I’ve already spent a lot of money just to purchase QuickBooks.

Ya, I get it – money is tight and we are all looking for ways to trim unnecessary dollars from our budgets – but are we sometimes being penny wise and dollar foolish?  Many times I think that answer is “Yes”.  Here is a real situation that I was involved in just last week, I was talking with this gal who works for a contractor and she told that she had just spent a total of 7 1/2 hours RE-DOING and RECALCULATING 28 (twenty-eight) AIA G-702/G-703 billing in Excel for a project that they were working on because of a number of changes that had taking place along the way.

Let’s take a look at this situation in a very analytic way which focuses on time and money:

• Let’s say this person is being paid $15.00 per hour
• It took 6 hours to originally do the 28 AIA Bills = $90.00
• 7 1/2 hours to RE-DO and RECALCULATE the AIA Billing = $112.50
• 13 1/2 hours spent on the billings for a single project = $202.50
• Cost of our QuickBooks integrated AIA Billing program = $295.00

You might be thinking: “ok, here is a 3rd party software developer who is trying to make a statement or a case as to WHY someone should buy their software”.  You could also justify this situation with the simple statement of “well, I have to pay them anyway; it’s part of their job” and I will agree with you to a point.  But as a business owner myself, I feel that I need to ask you “What isn’t being taken care of when the focus and the effort is being spent on re-doing something?”

Let’s look at this a little further:

• Let’s say that on average it takes 20 minutes to complete an AIA Bill using Excel
• You are currently working on 10 jobs
• You bill monthly
• 20 minutes x 10 billings = 200 minutes per month x 12 months = 2,400 minutes per year divided by 60 = 40 hours per year x $15.00 = $600.00

Comparing the costs of manually creating AIA Billings vs. an automated system

• Let’s say that on average it takes 5 minutes complete an AIA Bill using our software
• Same 10 jobs
• Same monthly billing schedule
• 5 minutes x 10 billings = 50 minutes per month x 12 months = 600 minutes per year divided by 60 = 10 hours per year x $15.00 = $150.00
• That’s a savings of 30 hours and $155.00 in wages saved through automation during the first year.

Now, you’re probably wondering how I came up with that $155.00 in savings, so let me explain:

$600.00 in wages using Excel – $150.00 in wages by automating the task – $295.00 for the price of the software = $155.00 in wages.

Still not convinced that automation is a good thing? Well let’s look at your 2nd year of ownership, where you pay a reasonable $50 per year in software maintenance:

• Same 5 minutes to complete an AIA Billing using our software
• Same 10 jobs
• Same monthly billing schedule
• Same $150.00 in wages
• Same 30 hours per year in time savings – BUT a savings of $400.00 in wages

Savings calculated as follows:

$600.00 in wages using Excel – $150.00 in wages by automating the task – $50.00 software maintenance = $400.00

Now $400.00 may not seem like a whole lot of money in this scenario, but when you think of it in terms of saving time, eliminating math errors and/or transposition errors, eliminating the time spent on having to re-do and recalculate billings due to changes and the cost of delayed payments when your payment applications aren’t right – well the savings is HUGE!

Look at the tasks that you perform manually and calculate the time and money that is being spent on them, look at the cost of 3rd party QuickBooks applications that will automate them and perform this same evaluation, I’ll bet that you too will find that you’ve fallen into the penny wise and dollar foolish trap.