The Ledger

New Costing Priorities Are Changing the Way We Do Business

In the wake of digital transformation becoming a standard business practice, it is no surprise that modern organizations are shifting their costing priorities from cost reduction to cost transformation. Companies that relied on more traditional cost management methods are now finding that dynamic technologies can open the door to a whole new level of savings. These additional cost savings allow businesses to compete more effectively in an increasingly digital environment. This change in business strategy drives finance leaders’ priorities to focus more on implementing the best technology for their business, and ultimately increase product profitability.  A best in class tool that caters to specific business needs enables organizations to achieve end-to-end visibility of their costs and use this information to better understand what is driving their profits.

Read More at CFO Magazine >

Agility and Integrated Analytics Are Essential to a Scalable Business

Businesses today that strive to get ahead of their competition need to have smarter, faster, collaborative and innovative systems that enable agility and advanced analytics. These organizations need a vision and strategy to define the future digital business state. It’s what aligns people in the organization on the priorities, capabilities, and collaboration required to successfully remove legacy business models and operations. For a business to successfully transform from today’s legacy products and business models to tomorrow’s scalable digital businesses, leaders need the ability to integrate external data sources. Adopting multi-disciplinary agile practices and making internal and external data available for decision making are two of the steps to driving digital core organizations. The most important step is changing the culture.

Read More at The Digitalist by SAP >

Are You Benefiting from Your Cost Accounting Tools?

Companies that still rely on their legacy costing systems are putting themselves at more of a disadvantage then they probably realize.

 “Many manufacturers have developed overhead rates that are being used long after their “best if used by” dates. The reasons for this include the thought that inflation isn’t all that significant, so how much different can the rate be from last year, and besides it’s so much work to update the rate. After a while, you find the rate hasn’t been updated in a few years and then your costing system has slid into ineffectiveness. Also, cost drivers tend to not be examined that often. Some manufacturers have always used labor hours as cost drivers, so they do not even consider that the significant capital expenditures they have made in the business make the more plausible cost driver machine hours. In standard costing systems, standards are sometimes not updated as often as they should be for some of the same reasons.”

The result of inaccurate cost accounting systems can lead to investing time and effort into products or customers that are either marginally profitable, or actually unprofitable.

Read More at The Bonadio Group >

Smart Businesses Plan For the Future

Most CFOs have been trained to focus on the past, with historical reporting and benchmarking at the heart of their mission. But as competitive pressures accelerate, they’re increasingly expected to help shape the future too. The businesses that will sprint ahead of the competition in the future are the ones who are actively preparing for events to come through scenario planning today. Proper scenario planning ensures that today’s growing companies are prepared for any conceivable future. Finance teams need the ability to confidently and accurately predict the impact of internal and external changes on the business, enabling the business to be proactive, rather than reactive.

Read More at Industry Week >