Profitability and cost management

Activity Based Costing/Management (ABC/M) is a tool that helps to explore opportunities for improving profitability of your company. Unlike traditional cost analysis approaches, ABC/M provides more accurate cost information for each activity, client/customer and product.

Using activity-based approaches can help to overcome the following business challenges:

• Improving sales strategy based on a profitability analysis of various cost objects (clients, products, services, regions and sales channels)
• Planning and controlling how resources are used, identifying wasteful expenditure, and exploring opportunities for cost reduction without affecting core operations
• Establishing the cost of internal functions and considering options for optimising them, including centralisation or outsourcing
• Differentiating levels of service offered to clients/customers

We offer a full range of services to help you develop comprehensive ABC/M-based solutions for profitability management, including development  of a framework for the process and implementation of a  specialised information system.

Our experience in developing cost management methodologies and models for companies in all industries, including banking, telecommunications, and oil and gas allows us to focus in on the issus in your business.

We help our clients with the processes of optimising cost management, analysing profitability and where necessary producing reports for the regulatory authorities (separate accounting for each type of business activity and regulated service).

Our professionals implement processes and models designed for use in industrial information systems such as SAP PCM, Hyperion, SAS, and ABM. They provide the support required and help to establish connections between ABC models and client’s accounting systems.

Depending on your company’s business and the current levels of sophistication in the financial/management accounting and planning functions, a project can include separate АВС/M components or involve development and implementation of an integrated solution. Our expert consultants are experienced in developing АВС/M systems at all levels, from diagnostics of the existing system and developing an activity-based costing concept to supporting the implementation of automated solutions for transaction accounting, data processing and reporting.

We will assist you  in forming a management reporting package that contains process-related performance indicators based on an ABC/M model. We will help you to integrate ABC/M system into your existing resource-intensive process management systems, allowing you to use the ABC/M system as both a reporting tool and a business management tool.

An integrated cost and profitability management system based upon an ABC/M model which consists of the following components:

• Management accounting forms for cost of resources and processes analysis, services and analysis  of the profitability of other cost objects
• ABC/M methodology including lists of resources, processes, cost objects, allocation bases, and the principles for income/expense allocation
• ABC/M model, either Excel-based or in a specialised information system
• RAS/IFRS accounting policy, chart of accounts, journals and instructions enhanced to support ABC/M methodology
• Procedures for maintaining and updating information kept in the ABC/M model
• Staff trained to operate the model and prepare management information and analysis on cost of resources, processes and services.