Regency Kitchen & Bath had a system to ensure that large purchase items, such as tubs and cabinets, were billed and accounted for, but the company did not have a system for $10, $20, or $100 invoices.
“Every week I would review stacks of invoices and expense reimbursement requests and would always find a common denominator,” says David Haskit, sales manager for the Los Angeles company. “No one was consistently accounting for all the little parts, fittings, or sticks of lumber that we were buying. Yet no amount of fretting or stamping my feet seemed to get the point across to employees that we weren't in business to give things away.”
ALL ACCOUNTED FOR Haskit credits one of his superintendents with suggesting that an additional 2% of the total estimate be included as a line item. “We do it for all jobs over $10,000,” Haskit says. “This covers those pesky little parts, plus the labor cost for that extra trip to the supply house.”
Regency Kitchen & Bath's line item description reads, “2% miscellaneous material cost allowance covers miscellaneous material costs such as nails, screws, consumables, masking materials, and fittings. No finish fixture costs are included with this miscellaneous cost item.”
Rarely do customers question the line item. But if they do, Haskit's answer is always the same: “Including this up front allows us to take care of unforeseen situations without having to track you down for approval of a minor item such as a rotten 2x4 or 5 feet of copper water line.”
Haskit put this system in place nearly four years ago and knows it has increased his bottom line because, he says, “Regency line-item job costs each project.” But the bigger benefit, he adds, is that he is no longer “overanalyzing all the nickel-and-dime invoices the company receives.”