Advice and Information for Finance Professionals
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Financial Planning & Analysis
September 14, 2017
How to Beat the Biggest Time Suck in Costing
It’s a given: every company needs to manage profit and loss. Competition is fierce in this digital age, and it’s harder than ever to raise prices. If you want to increase profitability, you need to know where you can reduce costs and where you should invest more.
To do this, you need a complete and accurate understanding of your cost drivers and allocations. Yet the majority of companies are stymied by the sheer complexity of their own data.
Companies today collect more data than ever, yet it’s often inaccessible—held in multiple systems that span products, customers and channels. According to Ventana Research, business users find it difficult to connect costs and expenses to specific customers, products, services, channels, and regions. Nearly half of the study respondents said data availability and quality must be addressed to improve performance; only 6 percent said all their information is up-to-date.
It’s tough to make good decisions about pricing, product development and capital investments when you’re looking at faulty profitability measures.
Gaining a Close-up View of Allocations
Organizations need the ability to collect, collate and manipulate the most granular data from each line of business. They must be able to break down financial details to the level of a single product, a single office, or even a single customer, and run granular analyses. Understanding the “why” and “how” of funds allocation helps finance teams see the bigger picture and work with other lines of business to make improvements.
But at what cost? How much time is your team spending on allocation-based processes, such as shared service allocations, transfer pricing allocations, IT costing, and so on? Do you have transparency between pre-allocated and post-allocated results? Can you easily change assumptions and run what-if analysis on your allocation calculations?
An inefficient allocation and costing process can waste vast amounts of time that should be spent on figuring out how to beat the competition and increase profitability.
To beat the biggest time suck in costing, I invite you to join us for a webcast with Financial Executives International (FEI). We’ll take a closer look at fine-grained profitability and cost management, including:
- Best practices in allocation-based processes, from A to Z
- The three biggest opportunities to save time in the allocation process
- The business value of transparency
This one-hour webcast counts as one CPE (continuing professional education) credit in finance, so be sure to join us for this educational discussion.