To be successful, business leaders need to have a good understanding of the total profits and losses for their organization. For even greater success, detailed visibility into profits and losses for every profit center, department and project within the business is critical.
Thankfully, with cost accounting functionality in a modern Enterprise Resource Planning (ERP) system, gaining detailed costing information about your current operations is easy. With an integrated solution like an ERP, you can better plan your company’s financials, manage operating costs, support lean accounting and accurately allocate resources.
Below, we look at the benefits of cost accounting and how modern ERP software can help businesses like yours better manage project costs, revenues and budgets for your projects.
The Benefits of Cost Accounting
Here’s a look at some of the top benefits of having end-to-end visibility of your costing data:
1. Cost Accounting Helps Businesses Accurately Ascertain Costs
Cost accounting enables management to accurately account for costs by factoring in both variable and fixed costs. It assists in the cost assessment of all facets of a business, including the cost of processes, products, projects and contracts. To do this, cost accounting relies on various techniques such as job costing, standard costing and process costing.
2. Cost Accounting Can Improve Cost-Efficiency
Perhaps the greatest benefit of implementing cost accounting is its ability to reduce costs and improve cost-efficiency without reducing the level of production. It can streamline processes to help identify waste factors, such as wasted time or surplus resources. Doing so enables you to cut back in key areas and improve the cost-effectiveness of your operations.
3. Cost Accounting Forms the Foundation of an Effective Budget Plan
Budgets are the most crucial aspect of resource planning, and cost accounting forms the very foundation of a successful budget. It can provide the framework for determining the actual cost of all business processes, the cost of each department, operating costs and production costs. Together, these can be used to inform accurate budgeting for businesses.
4. Cost Accounting Can Inform Better Decision Making
With cost accounting, you can thoroughly evaluate all strategies within your business, including cost-volume-profit analysis, investment appraisals, level of production and the profitability of products. This can improve decision-making abilities, as financial decisions will be driven by accurate assessments of all financial influences.
5. Cost Accounting Can Guide Pricing
By factoring in all variables such as supply and demand, market conditions and competing businesses, cost accounting can help in determining appropriate pricing of products, as well as the cost of producers. Using standard costing is a valuable part of this process, as it allows you to work with real figures and not estimates.
6. Cost Accounting Improves Departmental Accountability
By accurately assessing the costs associated with all aspects of business, leaders can develop targets for each department, as well as periodic milestones. This will improve financial accountability, providing each department with the blueprint it needs to remain within its budget.
How ERP Software Can Help
A flexible and modern ERP solution like Acumatica Cloud ERP has the goal of not only streamlining business processes and supporting lean accounting, but also allocating resources in a way that’s more efficient and cost-effective. Acumatica cost accounting supports all of these aims by helping to reduce waste, improve the accuracy of resource allocation and enhance the ability to ascertain the most precise costs. This, in turn, makes resource planning more effective.
Acumatica enables easier balancing of fixed and variable costs so you can efficiently and accurately plan for future finances. With built-in cost tracking, you can manage inventory, resources and materials from a single solution, gaining the most accurate and up-to-date cost assessment available.
To learn more about cost accounting functionality in Acumatica and how NexTec Group can help your business take control of its finances, contact us today. We’d love to chat.