Linking Job Costs to the General Ledger and Reconciliation in Jobpac

Jobpac links project costs and revenue to the general ledger so that your project reports and profit and loss statements tell the same story. 

This article explains the main linking methods and how they support reconciliation between job costing and the general ledger.

How Jobpac links job costs to the general ledger

Every cost recorded on a job in Jobpac ultimately needs to update a general ledger account. The way this link is set up is controlled in the job settings.

When you create or maintain a job, you choose how general ledger accounts are linked to that job’s costs. There are two main options:

• linking at cost type level
• linking at cost centre level

Both methods use a general ledger link table, but they apply at different levels of detail.

Linking at cost type level

Linking at cost type level is the most common method. In this approach, each cost type is linked to a general ledger account.

Key characteristics of cost type level linking:

• you define a set of cost types for the company, such as labour, materials and subcontract
• each cost type is linked to one or more general ledger accounts in a job general ledger link setup
• when a transaction is posted to a job, the system uses the cost type to determine which general ledger account to update

This approach keeps setup simpler while still giving you meaningful breakdowns in both job costing and the general ledger. It is well suited to organisations that want consistent posting rules across many jobs.

Linking at cost centre level

In some cases, you may want a different general ledger account for each cost centre on a job. In this approach, the link is defined at the combination of cost code and cost type.

Key characteristics of cost centre level linking:

• each cost centre (cost code plus cost type) can be linked to its own general ledger account
• this allows very detailed control over how costs flow into the general ledger
• it can result in more setup and maintenance, especially on large projects or when many cost centres are used

Cost centre level linking is useful when projects require a high level of detail in the general ledger, or where different parts of the same job need to post to different accounts for reporting reasons.

Choosing a linking method

When deciding between cost type level and cost centre level linking, consider:

• complexity of setup – cost type linking is simpler to set up and maintain
• reporting needs – cost centre linking can provide more granular general ledger reporting
• consistency across jobs – cost type linking encourages common posting rules across the company

Many organisations use cost type level linking as their standard and reserve cost centre level linking for special cases where the extra detail is needed.

How job costs and revenue flow into the profit and loss

The purpose of linking job costs to the general ledger is to ensure that the direct cost and direct revenue sections of the profit and loss statement are fully supported by job costing information.

In practice this means:

• every direct cost posted to the profit and loss should be associated with a job number
• every direct revenue item should also carry a job number
• general ledger accounts used for job costs and revenue are clearly identified and used consistently

This alignment makes it possible to compare the profit and loss statement with job level reports and understand how each project contributes to overall financial performance.

Reconciling job costs and revenue to the profit and loss

Jobpac provides tools to reconcile job costing information with the general ledger, particularly through contract valuation and forecasting functions.

At a high level, reconciliation involves:

• reviewing project revenue, cost and margin for each job
• comparing the total of direct job costs to the relevant expense lines in the profit and loss
• comparing the total of job revenue to the relevant income lines in the profit and loss

When job costs and revenue are always posted with a job number, and the general ledger link setup is consistent, these comparisons can be made with confidence.

Contract valuation and forecasting processes support this by providing a summary of each project’s financial status, which can be aligned to the general ledger at period end.

Good practices for reliable reconciliation

To keep reconciliation between job costing and the general ledger reliable, it helps to follow some consistent practices:

• Always use a job number for direct project costs and revenue that affect the profit and loss.
• Control which general ledger accounts are used for job related postings and keep them clearly identified.
• Review general ledger link setups whenever you change cost structures or add new cost types.
• Use period end processes to review project results and compare them with profit and loss totals.

These practices reduce the risk of costs or revenue being posted outside the job costing framework, which can make reconciliation difficult.

Putting linking and reconciliation together

Linking job costs to the general ledger in Jobpac brings together:

• a clear method of linking cost types or cost centres to general ledger accounts
• consistent use of job numbers on direct project costs and revenue
• structured period end reviews using project and general ledger reports

When these elements work together, you can reconcile job costs and revenue to the profit and loss, understand project performance in detail, and provide reliable financial information to the business.