Four Ways to Determine Your Clients' Profitability

2 Minute Read
Posted by Jeff Linn on Jul 24, 2019 5:11:40 PM
Step 1: Know your Direct & Indirect Labor Costs. 

Direct costs include wages for employees and direct transaction costs such as BPO labor that is attributed to a client or business unit. Indirect costs are items such as utilities, rent, etc. Indirect costs may also include supervisor and executive salaries. You'll have a much better understanding of a client's profitability if you're able to compare it to a thorough number of overall costs. 

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Step 2: Track Employee Time.

Tracking employee time by task and client allows you to measure the productivity of an employee while also tracking the total number of hours a task took to complete for a specific client. 

Step 3: Utilize Business Process Outsourcing. 

BPO firms thrive at process management and rely on closely monitored production tracking and incentives to yield sizable productivity increases at typically lower costs. 

Step 4: Allocate Indirect Labor.

The proportional allocation method will give you a better sense of which clients are adding to your bottom line by assigning a percentage of an indirect costs to all or several departments or revenue categories (clients) in your business. 

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