Having an effective expense control is essential for companies to increase their profit margins and remain financially healthy. For this control to be done in a more effective way, making the work of financial directors easier, using cost analysis software is essential.
As such software collects all data related to costs and their processes, using it allows managers to have access to more complete information in less time.
Are you interested in finding out more about cost analysis software? Keep reading and learn about 10 benefits of your business application!
What is cost analysis?
Cost analysis is a strategy used by companies and other institutions to keep track of their spending. The goal is to identify production costs and expenses that can be cut or reduced, in order to optimize the profits of the business by using its resources in a more efficient way.
Even if a company has growing sales and high turnover, if its costs are too high, this will reduce its profit margin – which can become an even more serious issue when the turnover decreases due to a market problem or a cyclical crisis. In such cases, the loss caused by high costs can even lead to the company’s bankruptcy.
An efficient spending control is able to avoid this type of problem, and the correct use of excellent cost analysis software makes this control simpler. Check out below 10 benefits that using such software can bring to the company’s financial management:
1. Cost and expense cutting
A company’s costs are divided between fixed and variable. Basically, fixed costs are labor, rent and administrative costs – that is, the company will continuously have to pay for them, whether it is selling more or less. Taxes, transportation, power and sales commission, however, vary according to the volume of sales. The more you sell, the higher these costs will be.
In addition, some experts often differentiate between costs and expenses: costs are directly related to production, while expenses are not. An automated control of the cost analysis will more accurately identify where the losses are, as well as the opportunities to reduce or optimize both costs and expenses.
2. Increased competitiveness
The cost analysis software will identify exactly how much it costs to produce the goods or services sold by the company, and where and what are the expenses that can be eliminated; in other words, it will more efficiently monitor where and how the resources are being spent. That way, it is much easier and more accurate to set the right price to achieve the desired profit margin.
If a shoe costs $ 30.00 to produce and the company wants a profit margin of 20%, it needs to sell the shoe at retail for $ 36.00. But if the company finds out, by using the control offered by the cost analysis software, that the same shoe can be produced for $ 25.00, it can sell it for $ 30.00. If a similar shoe manufactured by competitors is sold for $ 32.00, the company that used to sell at a more expensive price can now sell it cheaper, and gain market share from its competitors. Correct pricing is a powerful competitive advantage.
3. Access to relevant information
The cost analysis software collects all information related to the company’s expenses into a single database, which ensures the reliability of this information and makes the access of managers easier, making the data study process and strategy planning more practical.
4. Fewer mistakes and more security
Once all the data is inserted into a system, there is virtually no risk of losing or damaging important files.
In addition, it is possible to program the software with security mechanisms that recognize when data is entered in the wrong way, so that it alerts the employee, thus reducing the possibility of human errors. The software has password systems that protect the data and significantly reduce the chance that they will fall into the wrong hands.
5. Expense reduction
With process automation, expenses with cost control tend to decrease. And it is interesting to store the system in the cloud, as by doing so there is no need to invest in servers and their maintenance, which represents a significant saving. Another advantage of cloud storage is the possibility of using the service in a scaled manner, according to the demand of the company, thus avoiding payment for storage and idle services.
6. Time optimization and increased productivity
With automation, the process of recording and analyzing data becomes faster, which allows staff and managers to not waste time by manually filling out spreadsheets. This also allows them to dedicate themselves more to the activities of planning and executing strategies, thus increasing the company’s productivity.
7. Integrates sectors and engages employees
The cost management software integrates the different sectors and projects of the company, allowing improvements from some processes to be applied in other areas. By promoting the transparency and identification of costs, the software also makes it possible to better invest the budget. At the same time, collaborating is simpler and even more inviting, as with broad access and a more general view, everyone feels more connected to the company’s objectives.
8. Accelerates the implementation of organizational changes
If the company is undergoing restructuring, reduction or growth, the cost analysis software will allow these changes to be promoted more quickly and securely.
9. Replaces “feeling” with data
The business owner, especially in small businesses, tends to rely heavily on their intuition. This often works, but it is always safer to base decisions on hard data. That is what technology is for, and it should be used to make processes easier and enable more consistent business growth. Good cost analysis software will provide these necessary aids.
10. Increases the business’s sustainability
Effectively managing a company’s costs is critical for it to remain profitable and relevant in the marketplace over time. Having a system exclusively for this purpose simplifies management and makes its processes more accurate and efficient.
Although cost analysis software is critical for businesses these days it is important to choose suppliers that have developers with proven experience and expertise in the field. In this context, MyABCM presents itself as a serious institution that has been in the market for more than 20 years. During this period, it has been offering to its customers the highest quality service and support, which is essential for the investment in the program to bring the expected results.
Contact us and learn more about our solutions in cost analysis and strategic management software.