Management Accounting Pieces

…Business success or failure is always determined by the quality of the decisions management makes. The properly designed accounting system allows a manager to measure the impact of his or her decision and to define the best possible course of action…

Top 10 common missing puzzle pieces in a Management Accounting System:

The life’s blood of any business is Cash Flow! Do you have a complete CASH MANAGEMENT SYSTEM? Why not? Having cracks in your cash flow system is the easiest way to lose profit!
Are your Billing and Collection systems up-to-date and do you use current technology to its fullest advantage?
What is your credit policy? Should it be reviewed and updated?
Do you frequently review your accounts receivable and accounts payable aging reports?
Is your debt load excessive or do you lack the ability to get credit?
Do you use budgets properly? How often are they reviewed and do you know how to manage your expenses to budget in order to assure a guaranteed profit for your business (Profit Trending)?
Have you set up a system utilizing a breakeven analysis to manage your costs and set pricing to PROFIT?
Are your General Accounting procedures set up properly, or does everything just go in the shoebox?
How do you manage your inventory, waste, purchasing, idle time, scrap rate, or wrk-in-progress?
Do you job-cost, matching actual costs against standard costs? How do you determine standard costs?

Are you always chasing that elusive PROFIT PUZZLE PIECE?

THE PROFITABLE FEW :

“Whereas cumulative sales usually follow the typical 20/80 rule (that is, 20% of the customers provide 80% of the sales), the ‘whale curve’ for cumulative profitability usually reveals that the most profitable 20% of customers generate between 150% & 300% of total profits. The middle 70% break even & the least profitable 10% lose from 50% to 200% of total profits.”

M. D. Hutt & T. W. Speh, Business Marketing Management, 10th Edition, South Western Cengage Learning, pg. 100