How Accurate is Your Equipment Maintenance Cost Accounting?
The financial world is changing. Over the past several years, we’ve seen a significant increased reliance on technology, resulting in more sophisticated equipment in financial institutions. In cost-savings efforts, many institutions have shied away from only using maintenance contracts and now find themselves with a mix of contracts and time/material billing structures.
It’s time to ask – is that strategy really providing cost savings? In my experience, most financial institutions lack true accuracy in accounting for their equipment maintenance costs. Equipment repair costs are often co-mingled with all other “repair costs.” Following are some aspects to keep in mind as you look at assessing your budget for equipment maintenance.
MAINTENANCE CONTRACTS (M/C): Make sure you are aware of the impact that multiple expiration dates for multiple providers at multiple locations truly has on your budgeting data. To simplify future budgetary processes, it is worth the effort of having as many contracts as possible with co-terminous expiration dates. By doing this, you will eliminate the need to pro-rate and you will be better able to calculate the impact of the annual M/C cost increases.
TIME & MATERIAL (T/M): There is much to consider and specific actions to take when operating under a time and material maintenance structure:
- Record frequency of service on each piece of equipment
- What is the average cost per service event
- Compare service T/M service cost with previous M/C costs
- Does actual service history suggest any anomalies [too many service calls, service calls too expensive]
- Make sure to monitor warranties on all replaced parts
- Know which parts receive a core charge credit and what the credits should be
- Identify all competitive service providers and negotiate labor, travel and parts discounts
Juggling multiple vendors, multiple locations, multiple expiration dates and the nuances associated with a T/M servicing strategy can be the recipe for an accounting nightmare and surprising cost overruns. Equips can help you increase your accounting accuracy and simplify your budgeting while still maintaining the high level of equipment performance. Schedule a complimentary peer analysis at email@example.com and learn how you can have one agreement and a powerful online platform to service and manage all your equipment in the most efficient and cost effective manner.